Non-compete agreement for engineers: validity criteria & job change guide

For engineers considering a career change, non-compete agreements are unavoidable yet often intimidating. However, many such agreements are legally invalid. This article explains the six criteria for determining invalidity, different protections for employees versus freelancers, and practical steps for a smooth transition without legal complications.

1. What Are Non-Compete Obligations for Engineers? Basic Knowledge and Legal Basis

A non-compete obligation restricts joining competitors or starting competing businesses after leaving employment. While it naturally applies during employment, post-employment restrictions require separate agreements and are often legally invalid.

Definition of Non-Compete Obligations and Differences During and After Employment

A non-compete obligation restricts employees from engaging in activities that compete with their employer during or after employment. For engineers, this typically means restrictions on joining competing companies or starting businesses using similar technologies.

During employment, non-compete obligations arise automatically as a duty of good faith. After employment, however, they require explicit agreements through employment rules or written pledges—and critically, many post-employment obligations are excessively strict and likely legally invalid. Courts increasingly prioritize workers’ freedom of occupational choice and scrutinize corporate restrictions strictly.

Freedom of Occupational Choice vs. Protection of Corporate Interests

Article 22 of the Japanese Constitution guarantees “freedom of occupational choice” as a fundamental human right, allowing everyone to freely choose their occupation and change jobs. Companies also have legitimate needs to protect trade secrets and technical information.

Non-compete obligation validity hinges on balancing these competing values. Courts recognize corporate interests but prohibit excessive restrictions on workers’ occupational freedom.

In the IT industry, where technology evolves rapidly and engineers’ skills are versatile, non-compete restrictions face careful judicial scrutiny. Broad prohibitions like “no job changes to competing companies” are typically ruled invalid.

eference: Article 22 of the Constitution of Japan

Specific Actions Restricted for Engineers Under Non-Compete Obligations

Actions that may be subject to non-compete obligations for engineers are mainly classified into four categories.

① Joining a Competing Company

The most common case. For example, an engineer who worked at a web development company joining another web development company would fall under this category. However, restrictions based solely on being in the same industry are rare, and the specific competitive relationship and access to confidential information become important judgment criteria.

② Starting a Business or Freelancing in the Same Industry

After resignation, engaging in freelance work or starting a business in the same technical field may also be subject to non-compete obligations. The likelihood of problems increases particularly when directly using customer information or technical know-how obtained from the previous job.

③ Taking Out or Using Technical Information or Trade Secrets

Taking out confidential information such as source code, design documents, or customer lists and using them at a new employer may constitute a violation of the Unfair Competition Prevention Act, beyond just the non-compete obligation. This is clearly illegal conduct and should be avoided.

④ Marketing to Former Customers/Business Partners or Recruiting Employees

Directly marketing to former customers or inviting former colleagues to join a new employer may also constitute a violation of non-compete obligations. These actions directly infringe on the legitimate interests of the company, and courts tend to judge them relatively strictly.

Why Do Companies Impose Non-Compete Obligations on Engineers?

There are three main motivations for companies to impose non-compete obligations on engineers: protecting technical information and trade secrets (especially for R&D-heavy companies), recovering educational investments in trained engineers, and maintaining competitive advantage through proprietary knowledge and talent.

However, these motivations do not necessarily justify legally valid restrictions. The appropriate balance between corporate interests and workers’ rights is always called into question.

2. Six Criteria for Determining the Validity of Non-Compete Obligations for Engineers

The validity of non-compete obligations is determined by comprehensively judging the following six criteria. These are judgment criteria also indicated in the Ministry of Economy, Trade and Industry’s “Handbook for Protection of Confidential Information,” and courts also place importance on these elements. Non-compete obligations that do not meet these criteria have a high likelihood of being invalid.

Reference: Ministry of Economy, Trade and Industry “Handbook for Protection of Confidential Information” – Regarding the Validity of Non-Compete Obligation Contracts

Criterion ①: Are There Legitimate Corporate Interests to Protect?

For a company to impose a non-compete obligation, there must be “legitimate interests” worthy of protection. This is not simply general business knowledge or publicly known technology, but whether there was access to legally protectable information such as trade secrets or advanced technical information.

Cases Likely to Be Valid

• When engaged in research and development of unpublished new technologies or products
• When having daily access to technical information before patent applications
• When having detailed knowledge of important customer contract details or pricing strategies
• When involved in formulating the company’s medium- to long-term business strategy

Cases Likely to Be Invalid

• When only responsible for general web application development work
• When using only open source or publicly available technology stacks
• When access to special confidential information was absent or limited
• When work was limited to utilizing versatile programming skills

Courts strictly examine whether the “interests to be protected” claimed by the company are concrete and substantial. Vague claims such as “general knowledge related to IT” will not be recognized as legitimate interests.

Criterion ②: Employee’s Position (Degree of Access to Confidential Information)

The appropriateness of non-compete obligations varies greatly depending on the employee’s position and job duties. Employees in high positions with access to important confidential information are more likely to have valid non-compete obligations.

Cases Likely to Be Valid

• Executive level such as CTO or head of technical department
• Project manager for research and development projects
• Inventor of important technical patents
• Design manager for core systems

Cases Likely to Be Invalid

• Junior engineers or general developers
• When only responsible for routine maintenance and operations
• When access to confidential information was limited
• When employment period was short (less than one year, etc.)

Particularly for engineers, the title “engineer” alone is insufficient, and what specific authority and responsibilities they held and to what degree they accessed confidential information will be specifically questioned.

Criterion ③: Appropriateness of the Non-Compete Period

The duration of the non-compete obligation is an important factor affecting its validity. Generally, within one year is considered appropriate, but in the IT industry, where technology becomes obsolete quickly, there is also the view that shorter periods are more reasonable.

Cases Likely to Be Valid

• Restrictions within 6 months
• Within 1 year (however, when other conditions are appropriate)
• Reasonable period setting according to the characteristics of the technology

Cases Likely to Be Invalid

• Long-term restrictions of 2 years or more
• Excessively long periods such as 3 or 5 years
• Restrictions without a specified term or indefinite restrictions

As an important point, in the REI Former Employee Case (Tokyo District Court judgment dated May 13, 2022), even a one-year non-compete obligation was judged invalid through comprehensive assessment with other factors. This demonstrates that balance with other factors, not just the period alone, is important.

Criterion ④: Presence and Scope of Geographic Restrictions

Having geographic restrictions can increase the reasonableness of non-compete obligations in some cases. However, in the modern era with widespread remote work, the significance of geographic restrictions is diminishing.

Cases Likely to Be Valid

• Limited to specific prefectures (“within Tokyo” or “Kanto region,” etc.)
• Limited to the company’s main business areas
• Restrictions that match actual business expansion areas

Cases Likely to Be Invalid

• Broad restrictions such as “nationwide Japan”
• Unrealistic scope such as “worldwide”
• When there are no geographic restrictions at all

As a circumstance specific to the IT industry, with online service provision now mainstream, the effectiveness of geographic restrictions is limited. Courts also consider this point and rarely judge validity based solely on geographic restrictions.

Criterion ⑤: Clarity of the Scope of Prohibited Competitive Activities

Whether the activities prohibited by the non-compete obligation are concretely and clearly defined is an important judgment criterion. Ambiguous expressions such as “competing companies” or “similar business” have a high likelihood of being judged invalid.

Cases Likely to Be Valid

• Specific definitions such as “employment at companies whose main business is web application development”
• Specifying names of specific competing companies (“Prohibition of job changes to Company X, Company Y”)
• Clear scope setting such as “development of services directly competing with XX service provided by our company”

Cases Likely to Be Invalid

• Excessively broad restrictions such as “all IT-related work”
• Ambiguous expressions such as “same industry” or “similar work”
• When there is no specific definition of prohibited activities

Since engineers’ work is diverse, comprehensive restrictions such as “all programming work” tend to be judged invalid as excessively restricting freedom of occupational choice.

Criterion ⑥: Presence of Compensation Measures (Non-Compete Allowances)

Since freedom of occupational choice is being restricted, commensurate economic compensation is required. When there are no compensation measures or they are significantly low, non-compete obligations have a high likelihood of being invalid.

Cases Likely to Be Valid

• Payment of monthly non-compete allowances of 200,000 to 500,000 yen after resignation
• Clear addition of non-compete allowances to salary during employment
• Payment of 20-60% of monthly salary × restriction period (Ministry of Economy, Trade and Industry guideline reference)

Cases Likely to Be Invalid

• Complete absence of compensation measures
• Significantly low amounts (around tens of thousands of yen per month)
• Vague explanations such as “included in retirement benefits”
• Unclear payment conditions

Particular attention should be paid to cases where many companies attempt to impose non-compete obligations without compensation measures. This becomes a factor for strict judgment from courts.

Self-Assessment: Is Your Non-Compete Obligation Valid?

By answering the following six questions, you can self-assess the validity of the non-compete obligation:

• Did you have access to trade secrets or advanced technical information?
• Were you responsible for an important position or highly confidential work?
• Is the prohibition period within one year?
• Are geographic restrictions limited?
• Are the prohibited activities specifically defined?
• Are there sufficient compensation measures (allowances)?

Judgment Criteria:

• Three or more “No” answers: High likelihood of invalidity
• Five or more “No” answers: Extremely high likelihood of invalidity
• Particularly if ⑥ (compensation measures) is “No,” the likelihood of invalidity increases significantly on that alone

However, since individual circumstances must ultimately be comprehensively judged, consultation with a lawyer is recommended when uncertain.

■Related Reading

Understanding your legal rights is crucial when changing jobs. Learn the complete process and timeline for successful career transitions in Japan’s IT industry.

3. Different Legal Protection of Non-Compete Obligations for Full-Time and Freelance Engineers

The legal protection framework for non-compete obligations differs greatly depending on an engineer’s contract type. Understanding these differences is important for accurately grasping one’s position and taking appropriate action.

Non-Compete Obligations for Full-Time Engineers: Protection Under Labor Contract Law

Full-time engineers, as they qualify as “workers” under the Labor Standards Act, can receive strong legal protection.

Strong Protection Under Labor Law

Full-time employees are subject to the Labor Contract Act and Labor Standards Act, and their freedom of occupational choice under Article 22 of the Constitution is particularly strongly protected. Courts place importance on workers’ lives and future careers, conducting strict scrutiny of excessive restrictions by companies. The six criteria mentioned above also tend to be applied more strictly in cases of full-time employees.

Burden of Proof on the Company Side

The burden of proving the reasonableness of non-compete obligations lies with the company. Workers need only claim that “the restriction is unfair” and do not need to provide detailed proof. This is an important principle from the perspective of worker protection, considering the power imbalance between labor and management.

Points Full-Time Employees Should Note

Even if employment rules contain non-compete provisions, post-employment non-compete obligations do not automatically arise from that alone. Individual agreements (such as written pledges) are required for post-employment obligations. When asked to sign a written pledge at the time of resignation, the contents should be carefully reviewed, and negotiation for revisions or consultation with a lawyer should be considered as necessary.

Non-Compete Obligations for Freelance Engineers: Protection Under Antitrust Law

Freelance engineers do not qualify as “workers” under the Labor Standards Act and therefore cannot directly receive protection under labor law. However, protection exists under a different legal framework.

Reality of Not Receiving Labor Law Protection

Freelancers are treated as business operators and are therefore excluded from coverage under the Labor Contract Act and Labor Standards Act. This means they are easily placed in a disadvantageous position compared to full-time employees.

Protection Under Antitrust Law

Non-compete obligations imposed on freelancers may constitute “abuse of superior bargaining position” by the contracting company, potentially violating the Antimonopoly Act. The Japan Fair Trade Commission views unfair constraints on freelancers as problematic, and the following cases may be judged illegal:

• Unilaterally imposing disadvantageous contract terms
• Imposing excessive restrictions without compensation measures
• Not providing room for contract negotiation

Reference: Japan Fair Trade Commission “Guidelines for Creating an Environment Where Freelancers Can Work with Peace of Mind”

Protection Under the Subcontracting Act

When capital requirements are met, protection under the Subcontracting Act is also available. Imposing unfair transaction terms violates the Subcontracting Act and becomes subject to corrective measures by the Japan Fair Trade Commission.

Freelance Protection New Law (Enacted November 2024)

With the enactment of the Freelance Protection New Law in November 2024, the legal position of freelancers has been strengthened. This law imposes an obligation on contracting parties to clarify contract terms, and explicitly codifies the prohibition of unfair transaction terms, prohibition of retaliatory measures, etc.

Points Freelancers Should Note

Non-compete clauses in service contract agreements should be carefully checked before contracting. Unlike full-time employees, freelancers have greater room for contract negotiation, so it is possible to raise objections and request revisions regarding unfair clauses before contracting. Consultation with the Japan Fair Trade Commission is also an effective option.

Dangerous Wording Examples in Contracts

Regardless of whether one is a full-time employee or freelancer, the following wording should be avoided as dangerous.

Excessively Long Prohibition Periods

“Prohibit work in the same industry for 3 years after contract termination” → Considering the speed of technological innovation in the IT industry, 3 years is clearly an excessive restriction.

Vague and Broad Prohibition Scope

“Prohibit employment in the IT industry in general” or “Prohibit all involvement with companies providing similar services” → This is excessive restriction that substantially deprives freedom of occupational choice.

Restrictions Without Compensation Measures

“Prohibit competition without compensation” → Restrictions without compensation are invalid in principle.

Excessive Predetermined Damages

“Pay damages equivalent to 3 years of annual salary in case of violation” → Punitive damages diverging from actual damages violate public order and morals.

When encountering contracts containing these clauses, it is recommended to negotiate for revisions or consult with an expert before signing.

■Navigate Non-Compete Concerns with Expert Support

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4. Latest Case Law: System Engineer’s Non-Compete Obligation Ruled Invalid

Knowing actual court precedents is important for understanding the realistic judgment criteria for non-compete obligations. Here we explain in detail recent case law that is particularly useful as reference for engineers.

Overview of the REI Former Employee Case (Tokyo District Court Judgment dated May 13, 2022)

This case attracted attention as an important precedent showing the limits of non-compete obligations in the IT industry.

Parties and Background of the Case

• Plaintiff: REI Co., system engineer dispatch/placement company
• Defendant: Former employee (system engineer)
• Point of dispute: Validity of the one-year post-employment non-compete clause

Contents of the Written Pledge

The former employee who became the defendant had signed a written pledge at the time of resignation containing the following:

• Prohibition of employment at competing companies (IT-related enterprises) for one year after resignation
• Damages in case of violation: Amount equivalent to 2 years of salary
• Compensation measures: None

Court’s Judgment: Invalid as Violation of Public Order and Morals

The Tokyo District Court judged this non-compete obligation invalid as a violation of public order and morals under Article 90 of the Civil Code. The reasons were as follows:

① Long Prohibition Period

Regarding the one-year period, the court evaluated it as “considerably long.” Particularly in the IT industry, where technology becomes obsolete quickly, a one-year restriction was judged to excessively restrict employees’ job-hunting activities.

② Unclear Scope of Prohibited Work

The definition of “IT-related enterprises” was pointed out as ambiguous and excessively broad. It was deemed likely to excessively restrict the diverse activities of engineers.

③ Complete Absence of Compensation Measures

The fact that there was no economic compensation whatsoever despite restricting freedom of occupational choice became one of the most important reasons for invalidity.

④ Excessive in Light of Employee’s Position and Job Duties

The defendant was a general system engineer and did not have access to particularly advanced confidential information. In light of that position, the one-year non-compete obligation was judged excessive.

Important Points Demonstrated by This Case Law

“One Year” Can Also Be Invalid

While non-compete periods “within one year” are often considered appropriate, it became clear that depending on other conditions, even one year may be judged invalid. Particularly when there are no compensation measures, there is a high possibility that even one year will be judged too long.

Emphasis on Engineers’ Freedom of Occupational Choice

The court clearly demonstrated recognition of the high liquidity of IT personnel and the importance of career formation for engineers. It became clear that strict judgments will be made on excessive restrictions that rob technical personnel of growth opportunities.

Weight of Burden of Proof on the Company Side

It was confirmed that the mere claim “we will be troubled by competition” is insufficient, and it is necessary to prove in detail what specific damages will occur and why such restrictions are necessary.

Other Reference Case Law

Programmer Service Contract Case (Intellectual Property High Court, September 13, 2017)

It was shown that non-compete obligations in service contracts are also judged by the same criteria as employment contracts. This is an important precedent for freelance engineers as well. The court clarified its position that “post-employment competition by employees is free in principle.”

Cases Where Non-Compete Obligations Were Deemed Valid

On the other hand, non-compete obligations have been recognized as valid in the following cases:

• Officer/executive management level with access to highly confidential information
• Sufficient compensation measures (500,000 yen per month × 1 year, etc.)
• Reasonable scope and period of restrictions

From these case laws, it can be seen that the validity of non-compete obligations is comprehensively judged based on individual circumstances. Rather than uniform judgment, the specific situation of each case is emphasized.

■Related Reading

Beyond non-compete agreements, know your workplace rights and protections. Understand how to identify and avoid toxic work environments in Japan’s IT sector.

5. Risks and Reality When Engineers Violate Non-Compete Obligations

Understanding the risks when violating non-compete obligations accurately is important for making calm judgments. However, it should also be known that actual risks are often not as high as imagined in many cases.

Three Legal Risks

① Risk of Damage Claims

Damage claims are the most commonly used legal measure by companies. However, in reality, the hurdle for claims to be recognized is high.

Companies must specifically prove that they “actually suffered damages.” For example, proof of concrete causal relationships such as “sales decreased by XX yen due to competitive activities” or “lost X number of customers” is required. Abstract claims such as “there should generally be damages” will not be recognized.

Actual damage amounts vary greatly from several hundred thousand to tens of millions of yen depending on the case, but there is typically a large gap between the claimed amount and the amount actually recognized in court. Even if a company claims 10 million yen, it is not uncommon for only about 1 million yen to actually be recognized.

② Risk of Injunction Against Competitive Activities

An injunction seeks temporary suspension of employment at a new employer or cessation of specific work. However, to be recognized as a provisional disposition, the following two requirements must be met:

• Necessity of preservation (situation requiring urgency)
• Likelihood of winning the main case (high probability that the non-compete obligation is valid)

Meeting both of these requirements is actually difficult, and cases where injunctions are recognized are limited. Also, since this affects the new employer as well, it is important to discuss with the legal department of the new employer in advance.

③ Risk of Reduction or Non-Payment of Retirement Benefits

When there is a clause in the retirement benefit regulations for “reduction or non-payment in case of non-compete obligation violation,” retirement benefits may be affected. However, since retirement benefits have the character of deferred wages, complete non-payment has a high likelihood of being illegal. In court precedents, cases where reductions of around 30% were recognized exist, but complete non-payment is rarely recognized.

Likelihood of Actually Being Sued: High vs. Low Cases

Cases With High Likelihood of Being Sued

• Poached a large number of important customers (clear damage to the company)
• Took out highly confidential technical information and used it at a new employer
• Established a competing company and clearly stole the former employer’s business
• Prepared for job change/independence while still employed (duty of good faith is also questioned)

Cases With Low Likelihood of Being Sued

• Simply changed jobs to a competing company
• Only utilized general business knowledge and skills
• No proactive actions such as poaching customers
• Agreement on non-compete obligation is unclear or clearly invalid

Reality of Litigation

Litigation involves enormous costs and time for the company side as well. Attorney fees alone can amount to millions of yen, and litigation periods often extend to 1-2 years. There is also reputational risk of being “a company that sues former employees,” which may negatively affect recruitment of excellent talent.

Therefore, companies that actually take legal action are limited, and unless clear damages have occurred, it is rare to proceed to litigation. However, sincere response and risk management are necessary, and consideration to avoid unnecessary trouble should not be neglected.

■Minimize Legal Risks with Professional Career Guidance

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6. Five Ways Engineers Should Handle Non-Compete Obligations Before Changing Jobs

To successfully change jobs, appropriate handling of non-compete obligations is essential. By implementing the following five methods, you can minimize legal risks while achieving a smooth job transition.

Method ①: Always Check the Content Before Signing a Written Pledge at Resignation

It is common for companies to request signatures on written pledges at the time of resignation, but signing without sufficiently checking the content should be avoided.

Five Points to Check Before Signing

• Scope of prohibited competitive activities: Confirm whether it is specifically defined, check for excessively broad expressions such as “IT industry in general”
• Prohibition period: Confirm whether it is within one year; more than 2 years is clearly excessive
• Geographic restrictions: Confirm whether it is limited (“within Tokyo,” “Kanto region,” etc.); “nationwide” or “worldwide” are excessive restrictions
• Presence and amount of compensation measures: Check whether non-compete allowances are specified; the guideline is 20-60% of monthly salary × period
• Penalties in case of violation: Check whether there is an upper limit for damages; excessive predetermined damages may be invalid

Cases Where Signature Can Be Refused

When there is no prior agreement on post-employment non-compete obligations, it is possible to refuse to sign a written pledge at resignation. Particularly when the content is clearly excessive and unreasonable, or when there are no compensation measures at all, these become legitimate reasons for refusal.

How to Communicate When Refusing Signature

• “Please let me consult with a lawyer before making a judgment”
• “I believe the XX part is excessive, so could you please revise it?”
• It is important to respond calmly and politely without becoming emotional

Negotiation Techniques for Revision

• Propose shortening the period (1 year → 6 months, etc.)
• Propose limiting the scope (“IT in general” → “web app development,” etc.)
• Propose adding compensation measures
• Seek points of agreement by requesting partial revisions rather than complete refusal

Method ②: Check Non-Compete Provisions in Employment Rules in Advance

Employment rules are guaranteed to be accessible to employees at any time under the Labor Standards Act. When you begin considering a job change, first check the employment rules.

How to View Employment Rules

• Request viewing from the HR department
• Check through the internal system
• It is also possible to view employment rules filed with the Labor Standards Inspection Office

Clauses to Check

• Non-compete prohibition provisions during employment
• Post-employment non-compete obligation provisions (however, these often do not have effect on their own)
• Confidentiality obligation provisions
• Sanctions in case of violation (disciplinary action, damages, etc.)

Understanding When Unfavorable Clauses Are Found

Even if non-compete obligations are stated in employment rules, they do not automatically become valid from that alone. Particularly regarding post-employment non-compete obligations, there is a high possibility they will not have effect without individual agreements (such as written pledges).

Method ③: Decide Whether to Inform Your Current Company About Your New Employer

Whether to inform your current company about your new employer is a matter that should be carefully judged.

Presence or Absence of Legal Obligation

In principle, there is no legal obligation to inform about your new employer. Even if specified in employment rules or written pledges, excessive demands may be invalid from a privacy perspective.

Advantages of Informing

• May give a sincere impression and lead to amicable resignation
• Can confirm in advance that it does not constitute competition, providing peace of mind
• Can reduce risk of later trouble

Disadvantages of Informing

• Possibility of strengthened retention efforts
• Possibility of interference with new employer (rare but exists)
• Possibility of measures such as retirement benefit reductions based on non-compete obligation violations

Recommended Approach

• When clearly not constituting competition: No problem informing
• When there is possibility of competition: No need to force yourself to inform
• Expressions that do not specify the industry, such as “I plan to take on new challenges at my next workplace,” are also options

Method ④: Sufficient Handover and Appropriate Handling of Confidential Information

Sincere handover and appropriate management of confidential information are important for preventing later troubles.

Securing Sufficient Handover Period

The recommended period is at least 1 month, preferably 2-3 months. While legally, a 2-week advance notice of resignation is sufficient, securing a sufficient handover period is desirable for amicable resignation and avoiding future risks.

Document Preparation

• Creating manuals for responsibilities
• Enriching code comments
• Documenting project progress
• Creating detailed handover materials so successors won’t be troubled

Appropriate Handling of Confidential Information

Information That Should Not Be Taken Out:

• Source code (company’s copyrighted work)
• Technical specifications and design documents
• Customer lists and contracts
• All company confidential materials
• Personal information of colleagues

Be sure to check personal PCs and cloud services. Confirm and delete any company data remaining on personal PCs or smartphones, or in personal accounts on Dropbox, Google Drive, etc.

Method ⑤: Consult a Lawyer When Uncertain

When there are concerns about non-compete obligations, consultation with an expert is an effective option.

Situations Where Lawyer Consultation Is Recommended

• Being strongly requested to sign a non-compete obligation written pledge
• Having doubts about the validity of a written pledge already signed
• Having received damage claims or warnings from a former employer based on non-compete obligation violations
• Having received a job offer from a new employer but feeling uncertain about the relationship with non-compete obligations
• When high-value compensation measures or damage clauses are included

Timing of Consultation

Early consultation is desirable, with pre-signature consultation being best. However, even after signing, possibilities for asserting invalidity can be examined, so there is no need to give up. Immediate consultation when contacted by a former employer is also important.

Estimated Attorney Fees

• Initial consultation: About 5,000-10,000 yen for 30 minutes (some offices offer free consultations)
• Document review: About 30,000-100,000 yen
• Negotiation representation: About 100,000-500,000 yen
• Litigation response: 300,000 yen to over 1 million yen (depending on case complexity)

How to Utilize Free Legal Consultations

• Legal Support Center (Houterasu): Free consultation available (up to 3 times) if income requirements are met
• Bar association free consultations: Conducted by bar associations in each region
• Municipal legal consultations: Free legal consultations conducted by cities, wards, towns, and villages
• Unions (labor organizations): Can join individually, consultations often free

■Related Reading

Planning your career transition requires strategic preparation. Discover proven strategies to maximize your salary potential when changing jobs in Japan.

7. Practical Advice for Engineers to Achieve Amicable Resignation

Going beyond the issue of non-compete obligations, achieving an amicable resignation is important for long-term career formation. The IT industry is a small world, and there is a high possibility of working again with former colleagues and former supervisors in the future.

How to Communicate Resignation Reasons

Putting Positive Reasons at the Forefront

When communicating resignation reasons, it is important to put forward-looking reasons at the forefront.

• “I want to challenge new technologies”
• “I want to study the XX field in depth”
• “I want to broaden my career”
• “I want to be involved in larger-scale projects”

These forward-looking reasons are easily accepted as demonstrating one’s growth motivation without negating the current company.

Reasons to Avoid

• Complaints about the company or supervisor
• Complaints about treatment (even if honest, don’t voice them)
• Criticism of colleagues
• Expressions containing negative emotions

Even if these reasons are facts, they may worsen relationships and become future risks.

Responding to Strong Retention Efforts

Making Clear That Your Resignation Decision Is Firm

Avoid ambiguous responses such as “I’ll consider it” and clearly state “My decision will not change.” Ambiguous attitudes rather cause retention efforts to be prolonged.

Submitting a Letter of Resignation

Be sure to submit in writing, not just orally. Legally, resignation is possible with 2 weeks’ advance notice (Article 627 of the Civil Code). By submitting a letter of resignation, your intention to resign is formally recorded.

Reference: Article 627 of the Civil Code

Balance of Gratitude and Apology

Express gratitude for growth opportunities during employment while also apologizing for not being able to respond to retention efforts. However, it is important not to waver in your stance of not withdrawing your intention to resign.

Maintaining Post-Resignation Relationships

Appropriate Distance With Former Colleagues

While personal friendly relationships can continue without problem, attention to the following points is necessary:

• Avoid topics about confidential information during employment
• Be cautious as poaching former colleagues may constitute non-compete obligation violation
• Maintain relationships conscious of potential business opportunities in the future

Caution With Social Media Posts

• Strictly prohibited: Bad-mouthing former employer or posting confidential information
• Don’t excessively publicize information about new employer either
• Updating profiles on LinkedIn etc. is fine, but avoid provocative expressions

Possibility of Future Business Opportunities

Since the IT industry is small, there is a high possibility of working again with former colleagues. Maintaining good relationships is a plus for long-term careers. After the non-compete obligation period ends, there may be opportunities for collaboration.

Importance of Showing Gratitude

By expressing gratitude for growth opportunities during employment and making individual greetings to colleagues and supervisors, you can leave a positive impression. Forward-looking messages such as “I would be happy if we could work together again in the future” are effective for maintaining good relationships.

By viewing resignation not as an ending but as the beginning of a new relationship, it can also become an opportunity to expand your future network.

■Related Reading

Finding the right company fit is essential for long-term career success. Learn the key checkpoints to evaluate potential employers in Japan’s tech industry.

8. Frequently Asked Questions About Non-Compete Obligations for Engineers

Here are compiled frequently asked questions and answers regarding non-compete obligations for engineers at the time of job change. Use them as reference for appropriate responses according to specific situations.

Q1. Should I Wait Until the Non-Compete Obligation Period Passes?

Cases Where Waiting Is Advisable

• The non-compete obligation is clearly valid (meets the six criteria)
• Sufficient compensation measures are being paid
• The new employer is clearly a direct competitor
• When you want to completely avoid litigation risk

Cases Where Waiting Is Not Necessary

• The non-compete obligation is clearly invalid (does not meet the six criteria)
• There are no compensation measures or they are insufficient
• The new employer does not substantially constitute competition
• When career opportunity loss is significant

When in doubt about judgment, it is recommended to consider the balance between legal risk and career opportunities and consult with a lawyer as necessary.

Q2. If Contacted by Former Employer After Changing Jobs, How Should I Respond?

Response by Type of Contact

For fact-finding inquiries:

• Explain facts calmly
• Don’t lie (may become a problem later)
• Don’t provide more information than necessary

For warnings of non-compete obligation violations:

• Examine the content and consult a lawyer as necessary
• Basically respond in writing without becoming emotional
• Avoid oral agreements or promises

For damage claim notifications:

• Consult a lawyer immediately
• Respond appropriately without ignoring
• Also report to supervisor and legal department at new employer

Q3. Do Side Business Competitive Activities Constitute Non-Compete Obligation Violations?

Side Business During Employment

If side business is prohibited in employment rules, the side business itself becomes a problem first. Side business that constitutes competition may become a more serious problem as a breach of the duty of good faith.

Side Business After Resignation

Even side business may be subject to non-compete obligations. When trading with multiple companies as a freelancer, attention is needed to the scope of non-compete obligations with each company.

Q4. Can a Job Offer Be Rescinded Due to Changing Jobs to a Competing Company?

While it is not impossible for a new employer company to rescind a job offer due to concerns about legal action from the former employer, it is actually a rare case.

Methods to Reduce Risk

• Honestly communicate the existence of the non-compete obligation at the interview stage
• Explain the content and that there is a high possibility it is invalid
• Have them consult with the legal department of the new employer company
• Submit a lawyer’s opinion letter if necessary

Q5. Should I Tell a Recruitment Agent About Non-Compete Obligations?

Reasons to Tell

• Agents can select appropriate new employers
• Can prevent trouble after receiving job offers
• Can receive support with understanding of legal risks
• Experienced agents have handled similar cases

When telling them, it is important to briefly explain the existence and content of the non-compete obligation and also share the recognition that “there is a high possibility it is invalid.”

Q6. Do Non-Compete Obligations at Foreign-Capital Companies Apply Japanese Law?

Confirming Governing Law

The first step is to confirm the “governing law” clause in the employment contract. If it clearly states “governed by Japanese law,” Japanese law applies. Even without clear statement, Japanese law applies in principle for work within Japan.

When Foreign Law Is the Governing Law

Even when US law etc. is the governing law, mandatory provisions of Japanese labor law may apply. The judgment criterion for validity of non-compete obligations is whether they violate Japanese public order and morals.

■Related Reading

Mastering technical interviews is crucial for career advancement. Prepare effectively with comprehensive questions, answers, and expert strategies.

9. No Need for Engineers to Be Overly Afraid of Non-Compete Obligations

Many non-compete obligations for engineers have a high likelihood of being legally invalid because they do not meet the six judgment criteria. Particularly when there are no compensation measures, the period is too long, or the scope is ambiguous, they tend to be judged invalid.

Full-time employees can receive protection under the Labor Contract Act, and freelancers can receive protection under the Antimonopoly Act and the Freelance Protection New Law.

With appropriate knowledge and response, it is fully possible to realize your ideal career path without being bound by non-compete obligations. The possibilities of your technology and career are for you as an engineer to decide.

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