(Yicai Global) Oct. 12 -- Chang Cheng, the former head of Lenovo Group's mobile phone business, violated a non-competition agreement when he left the firm and went to work for Xiaomi, Beijing labor arbitrators ruled, directing Chang to continue to fulfill his non-competition obligations and pay CNY5.25 million (USD783,825) in liquidated damages to Lenovo for breach of a non-competition agreement.

Beijing Zhonglun W&D Law Firm issued a statement on the same day that it had been entrusted by Chang to file a lawsuit against the ruling issued on Oct. 9, which has no binding legal force.

Chang cited family reasons for his resignation from Lenovo at the start of the year and joined smartphone colossus Xiaomi two days later in a high profile move, serving as its vice president for mobile phone product planning.

Lenovo has received the arbitral award and is encouraged by it, it said on Oct. 10.

Lenovo signs non-compete clauses with all executives, it said. The company paid Chang over CNY5 million in equity as consideration for the non-competition two years before his departure after the signing of his contract in 2017. It demanded arbitrators direct Chang to return his equity incentives, pay liquidated damages -- those whose amount the parties agree to in advance -- for breach of the non-competition agreement, and continue to discharge his non-competition obligations.

To prevent rivals from poaching talent, employees privy to a company's core secrets are barred from working in the same sector for a period of usually two years after resignation, during which time the firm pays these departed employees certain compensation, per the provisions of the non-competition agreement.

Editor: Ben Armour