Hi,
I need some clarifications from experts here. I recently resigned and shifted to another company named \"ABC\" from \"X\" company just 2 months back. A company named \"Y\" reached me to do a freelance work. Originally the work is given by \"Z\" company to \"Y\".
Actually \"Z\" is a client of \"X\" company. Directly or in-directly i never shared / asked / reached \"Y\" company to reach \"Z\" company and get works.
Now, \"X\" company is saying that how can you work for \"Z\" company. I said to them that i never reached to them for business. I got work from an \"Y\" company and i am doing it thats it.
Hence i request, as per indian rules & regulations can i work for \"Y\" company though \"Z\" is client of \"X\" & \"Y\" companies.
From India, Hyderabad
I need some clarifications from experts here. I recently resigned and shifted to another company named \"ABC\" from \"X\" company just 2 months back. A company named \"Y\" reached me to do a freelance work. Originally the work is given by \"Z\" company to \"Y\".
Actually \"Z\" is a client of \"X\" company. Directly or in-directly i never shared / asked / reached \"Y\" company to reach \"Z\" company and get works.
Now, \"X\" company is saying that how can you work for \"Z\" company. I said to them that i never reached to them for business. I got work from an \"Y\" company and i am doing it thats it.
Hence i request, as per indian rules & regulations can i work for \"Y\" company though \"Z\" is client of \"X\" & \"Y\" companies.
From India, Hyderabad
As such, there are no statutory or legislative provisions that prohibit a person from working in any organisation.
The only restrictions that apply in the situation that you describe above emanate from employment, contractual, partnership and other similar agreements or contracts.
Collectively and popularly, these restrictions are referred to as 'non-compete provisions'.
If, at time of accepting employment with company X your 'contract of employment' or 'letter of appointment' contained non-compete clause/s, and you signed that letter or contract having been made fully aware of such clause/s by company X, then company X may be within its rights to object to your working for company Z.
But, its not as cut and dry as I've made it out in the previous paragraph. That is intended to give you fundamental info re: a non-compete clause.
Its one thing to have an non-compete clause. Its another thing to determine its veracity, its legality, its fairness, and above all, its enforceability.
The Supreme Court of India has (in the recent past) declared unanimously that any non-compete clause that infringes unfairly and unjustly upon an individual's or a company's constitutional right to participate in employment or conduct business as their source of primary income in an area where that individual or company have core skills and those activities form their core employment or business activity, then any such clause is unjust and unenforceable.
And, even where the Supreme Court has found non-compete clauses to be legally sound, it has frowned upon any period of non-compete exclusion that exceeds 3 - 6 months (for companies) and 2 - 4 weeks for individuals.
And, the Supreme Court has also held that where a non-compete clause exists and the plaintiff intends to execute such clause, then in such circumstances the plaintiff MUST compensate the disadvantaged party/s to an amount not less than the last highest compensation which the defendant was entitled to immediately prior to the separation of both parties.
This is a very common occurence for merchant bankers, brokerage firms, legal firms etc... where the disadvantaged party is prohibited from conducting any employment or business activity for up to 6 - 8 weeks post-separation. But, then the disadvantaged party is compensated in full for the entire duration of non-compete provisions.
These judgments have had a significant impact on partnership agreements and appointments of senior executives.
In your case though, it could well be a case of bruised prestige or sour grapes. Because, the truth is that if you were a contractor with company Y and they sub-contracted you to work for company Z, there is literally no remedy available to X to pursue a non-compete clause even if its crossed all the t's and dotted all the i's.
Also, the fact that you've been gone from X for over 2 months, you stand on good grounds, even if X were to litigate against you. And, to litigate, they must first send you formal 'cease and desist' notification citing enforceable provisions from your contract or appointment letter when you first started to work for them.
DISCLAIMER: My reply to you on this post is intended as information ONLY. I am NOT a lawyer and do not intend for this post to offer you, or for its contents to be substituted for, construed (or misconstrued) whether inadvertently or by design, as legal advice - implied or explicit. I strongly encourage you to seek legal advice from a qualified and authorised lawyer to ensure the veracity of information upon which to arrive at an informed decision re: next steps.
I hope this helps you. All the best!
From India, Gurgaon
95The only restrictions that apply in the situation that you describe above emanate from employment, contractual, partnership and other similar agreements or contracts.
Collectively and popularly, these restrictions are referred to as 'non-compete provisions'.
If, at time of accepting employment with company X your 'contract of employment' or 'letter of appointment' contained non-compete clause/s, and you signed that letter or contract having been made fully aware of such clause/s by company X, then company X may be within its rights to object to your working for company Z.
But, its not as cut and dry as I've made it out in the previous paragraph. That is intended to give you fundamental info re: a non-compete clause.
Its one thing to have an non-compete clause. Its another thing to determine its veracity, its legality, its fairness, and above all, its enforceability.
The Supreme Court of India has (in the recent past) declared unanimously that any non-compete clause that infringes unfairly and unjustly upon an individual's or a company's constitutional right to participate in employment or conduct business as their source of primary income in an area where that individual or company have core skills and those activities form their core employment or business activity, then any such clause is unjust and unenforceable.
And, even where the Supreme Court has found non-compete clauses to be legally sound, it has frowned upon any period of non-compete exclusion that exceeds 3 - 6 months (for companies) and 2 - 4 weeks for individuals.
And, the Supreme Court has also held that where a non-compete clause exists and the plaintiff intends to execute such clause, then in such circumstances the plaintiff MUST compensate the disadvantaged party/s to an amount not less than the last highest compensation which the defendant was entitled to immediately prior to the separation of both parties.
This is a very common occurence for merchant bankers, brokerage firms, legal firms etc... where the disadvantaged party is prohibited from conducting any employment or business activity for up to 6 - 8 weeks post-separation. But, then the disadvantaged party is compensated in full for the entire duration of non-compete provisions.
These judgments have had a significant impact on partnership agreements and appointments of senior executives.
In your case though, it could well be a case of bruised prestige or sour grapes. Because, the truth is that if you were a contractor with company Y and they sub-contracted you to work for company Z, there is literally no remedy available to X to pursue a non-compete clause even if its crossed all the t's and dotted all the i's.
Also, the fact that you've been gone from X for over 2 months, you stand on good grounds, even if X were to litigate against you. And, to litigate, they must first send you formal 'cease and desist' notification citing enforceable provisions from your contract or appointment letter when you first started to work for them.
DISCLAIMER: My reply to you on this post is intended as information ONLY. I am NOT a lawyer and do not intend for this post to offer you, or for its contents to be substituted for, construed (or misconstrued) whether inadvertently or by design, as legal advice - implied or explicit. I strongly encourage you to seek legal advice from a qualified and authorised lawyer to ensure the veracity of information upon which to arrive at an informed decision re: next steps.
I hope this helps you. All the best!
From India, Gurgaon
there are few major issues to be observed here Mr. (you) love your work, 1) whether the company to which you are assisting as a freelancer is a "competitor company", or the company which hold its business in the same filed or sector of the company you are regularly working ?
2) whether the job you perform as a freelancer requires the same knowledge and skill sets which you shall use in your regular job??
3) Does your employment agreement oppose any such activities?? (Infact, it is considered as the implied terms of employment, the precedents are clear on the aspect, so you can not defend saying that the employment agreement is not explicit on the condition... of course, if the work you do as freelancer had got nothing do with your regular ob and entirely different kind of skills required, this implication does not apply...) (Also, if you yourself own a company which requires the same skills/knowledge when work as employee, the employer must have the knowledge that you own such company during the employment, and in case you have not revealed the company may go for employment malpractices against you)
4) you had the knowledge about the company as the client competitor of the company you regularly having employment?
If any of the above issue has a positive reply " yes", then your freelancing would be considered as "Mal-practice" under employment, and the company may issue a termination letter to you or also may take the disciplinary action against such activity, since you can never prove that the company's confidential and work related information is not being revealed and being utilized against the regular company.
So, the freelance work done to the company is not justified under the law, in any way........
From India, Bangalore
2) whether the job you perform as a freelancer requires the same knowledge and skill sets which you shall use in your regular job??
3) Does your employment agreement oppose any such activities?? (Infact, it is considered as the implied terms of employment, the precedents are clear on the aspect, so you can not defend saying that the employment agreement is not explicit on the condition... of course, if the work you do as freelancer had got nothing do with your regular ob and entirely different kind of skills required, this implication does not apply...) (Also, if you yourself own a company which requires the same skills/knowledge when work as employee, the employer must have the knowledge that you own such company during the employment, and in case you have not revealed the company may go for employment malpractices against you)
4) you had the knowledge about the company as the client competitor of the company you regularly having employment?
If any of the above issue has a positive reply " yes", then your freelancing would be considered as "Mal-practice" under employment, and the company may issue a termination letter to you or also may take the disciplinary action against such activity, since you can never prove that the company's confidential and work related information is not being revealed and being utilized against the regular company.
So, the freelance work done to the company is not justified under the law, in any way........
From India, Bangalore
I totally agree with BSSV's advice.
It is sound advice for conflict of interest situations - where there is a direct or indirect conflict of interest between a person's current employment and their participation in competing activities (simultaneously & concurrently) without complete disclosure of the conflict to the current employer, and that employer consenting to the continuation of that conflict.
But, if I understand the question correctly, he/she resigned from his/her employer 2 months prior to the situation arising.
The issue of conflict isn't being raised by his/her current employer. Instead, its being raised by the former employer from whom s/he has been separated for about 2 months.
Thus, for the pervious employer to consider the new activity as a conflict (of any variety) can only be substantiated if the original appointment letter or contract of employment (or any mutually consented document signed during the term of employment) contained a non-compete clause that would kick in Post-Separation.
From India, Gurgaon
It is sound advice for conflict of interest situations - where there is a direct or indirect conflict of interest between a person's current employment and their participation in competing activities (simultaneously & concurrently) without complete disclosure of the conflict to the current employer, and that employer consenting to the continuation of that conflict.
But, if I understand the question correctly, he/she resigned from his/her employer 2 months prior to the situation arising.
The issue of conflict isn't being raised by his/her current employer. Instead, its being raised by the former employer from whom s/he has been separated for about 2 months.
Thus, for the pervious employer to consider the new activity as a conflict (of any variety) can only be substantiated if the original appointment letter or contract of employment (or any mutually consented document signed during the term of employment) contained a non-compete clause that would kick in Post-Separation.
From India, Gurgaon
Thanks for your reply. I never signed on any papers related to contract agreement etc...
If i signed i should not work for clients of "X" till 3-6 months? i dont understand about company and individual here.
Before giving "cease and desist" notification can they do anything like police case etc...
I thank you for your time, i will reach lawyer soon...
From India, Hyderabad
If i signed i should not work for clients of "X" till 3-6 months? i dont understand about company and individual here.
Before giving "cease and desist" notification can they do anything like police case etc...
I thank you for your time, i will reach lawyer soon...
From India, Hyderabad
I have referred to Companies and Individuals to give you an idea of how non-compete clauses work for both.
For individuals they are contained in Employment Contracts, Appointment Letters etc...
For companies they are included in Joint Venture Agreemnts, Partnership Agreements, Merger Agreements etc...
Generally, a cease-and-desist process is not pre-empted by a police case - unless of course a person has committed a criminal act or omission during his/her tenure of employment with the employer that may not have been detected during the course of their employment (eg) a fraud or other similar acts/omissions that was detected AFTER cessation of employment at that company.
But, I think the wisest thing you can do is speak to a lawyer and take advice from a qualified professional who can assist you appropriately.
Good Luck!
From India, Gurgaon
For individuals they are contained in Employment Contracts, Appointment Letters etc...
For companies they are included in Joint Venture Agreemnts, Partnership Agreements, Merger Agreements etc...
Generally, a cease-and-desist process is not pre-empted by a police case - unless of course a person has committed a criminal act or omission during his/her tenure of employment with the employer that may not have been detected during the course of their employment (eg) a fraud or other similar acts/omissions that was detected AFTER cessation of employment at that company.
But, I think the wisest thing you can do is speak to a lawyer and take advice from a qualified professional who can assist you appropriately.
Good Luck!
From India, Gurgaon
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