HYBE faces allegations of enforcing unfair “non-compete” agreement clauses on former employees

On November 21, 2024, Sports Kyunghyang reported that HYBE faced scrutiny for allegedly forcing unfair clauses on former employees. This includes a "non-compete" agreement where it states that within a year after their resignation, former HYBE employees are not allowed to work or collaborate with employees of the same or comparable organizations.

Furthermore, within a year after their resignation, employees are not allowed to start or run businesses that are identical to or comparable to their previous employer.

The "non-compete" clause is a standard practice followed globally by tech conglomerates to prevent the leak of company secrets and information to competitors. However, Sports Kyunghyang reported that in the South Korean entertainment industry, a "non-compete" agreement has never been followed. Law Firm Jongjeon's attorney Noh Jong-eon told the news outlet:

"The scope of the non-compete clause is very comprehensive, so it has the potential to infringe on the freedom of employees to choose their jobs. Regarding the validity of non-compete agreements, the Supreme Court has ruled that ‘freedom to choose a job and the right to work are fundamental rights of the people."

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HYBE responds to its "non-compete" agreements for workers, citing it's to protect company secrets

According to Sports Kyunghyang, HYBE established a "permanent" retention period for the confidentiality agreement for former workers which is a violation of the Personal Information Protection Act. Attorney Noh Jong-eon said:

"Personnel-related documents should not be kept longer than the legal retention period, and all documents should be destroyed within 5 days after the legal retention period expires. Failure to do so may result in a violation of the Personal Information Protection Act."

Meanwhile, HYBE responded to the ongoing scrutiny of its "non-compete" agreement and stated that a review panel legally analyses the documents submitted by an employee when they resign. The company added:

"The non-compete is a measure that takes into account the characteristics of the industry where creative work such as content production is the main focus, as it prohibits transfer to a similar or identical company or related sales activities that could leak the company’s trade secrets for one year after leaving the company."

HYBE also added that the "non-filing" agreement allows the company to acquire and retain documents and data created by the employees during their tenure.

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In other news, HYBE faced public backlash for its leaked internal report where the 18,000-page document allegedly contained demeaning remarks about idol groups. The document's 2,000 pages were shared at the National Assembly Audit on October 24, 2024.

Later, HYBE CEO, Lee Jae-sang, apologized by acknowledging the inappropriate document on October 29.