Chinese instant messaging and online game company Tencent has confirmed to local media that the company has formally sued 15 former employees who are suspected of violating non-compete obligations in the work contracts.

The lawsuit will be heard for the first time on December 26, 2008 at Futian People's Court in Shenzhen and the focus of the two sides' dispute lies in the non-compete term in the contracts signed between Tencent and these employees.

According to the document provided by one of these employees, it says in the contract that if an employee departs from the position, regardless of the reason, the employee should not work in companies that manage similar businesses as those of Tencent, including those dealing with instant messaging products, communications, online chat, friend-making services, mobile communication value-added services, online games, online entertainment, Internet information, and other network, communications and software products, within two years. At the same time, the employee should not directly or indirectly work for or provide services to these companies.

Tencent says that the lawsuit aims to safeguard the legitimate rights of company while the relevant employees say Tencent does not pay a non-compete compensation, so the agreement is invalid.

According to the explanation of lawyers quoted in local media reports on this issue, non-compete agreement are divided into two situations. For senior managing staff who have high salaries, they are obliged to observe the non-compete agreement and the company does not necessarily pay a compensation. For lower-level staff, from a legal perspective the company should pay compensation to make the non-compete agreements valid. However, different cases require their own dedicated detailed analysis because each case can be different.