Ms. Liu, dismissed on the grounds that her husband served as CEO of a rival company, filed a lawsuit seeking compensation, with the court ultimately ruling her termination unlawful.

The People's Court of Xuhui District, Shanghai, recently heard the case in late April. Records indicate Ms. Liu had been employed at a real estate management company since 2006.

In late 2023, the company informed her of the termination of her employment contract, citing her husband's role as general director at a rival enterprise, which they claimed had a "negative impact" on the company.

In 2/2024, Ms. Liu filed a petition with the labor arbitration committee, demanding 680,000 yuan in wages, 60,000 yuan in 2023 bonuses, and 10,000 yuan for unused leave days from the company.

Two months later, the arbitration committee ordered the company to compensate her with 680,000 yuan along with the unused leave pay.

Disagreeing with the decision, the company filed a lawsuit with the court. The company argued that Ms. Liu, as an executive manager, had access to confidential data and information, while her husband had established a competing company in the same industry.

Online posts also showed her husband appearing at several exhibitions as the general director of the rival enterprise.

Court: Spouses working in the same industry is normal

In court, Ms. Liu stated that she did not possess confidential company information and only performed support tasks. According to her, her husband did not actually work for the rival company but merely used that title when attending events for ease of communication.

The judicial panel determined that the company failed to provide evidence that Ms. Liu's husband had exploited his wife's position to cause harm to the enterprise.

The court upheld the labor arbitration committee's ruling, affirming that Ms. Liu's dismissal was unlawful.

According to the court, it is quite common for spouses to work for different companies within the same sector. China's Labor Contract Law stipulates that non-compete clauses only apply to senior management, senior technicians, or individuals with confidentiality obligations, and must be in writing.

In this case, Ms. Liu was not a senior executive, and the company had not required her to sign a non-compete agreement.

The case subsequently sparked extensive debate on social media. Many opinions suggested that while businesses have the right to dismiss employees, they must provide compensation if the dismissal violates the law.

Hai Thu (According to SCMP)