There is no anti-compete clause in the appointment letter however the company doesn’t want the employee to go work with the competitor. Can the company do anything? What does labor law say?
Legally any agreement (even when there is an agreement) restricting the employee from joining a competitor after leaving the company is invalid. Therefore, the employee is free to join any organisation after resigning from the current company. The employer can, however, take away all the drawings, documents, information in hard and soft form etc from the employee before he is relieved. But the information that is stored in his brain cannot be taken out and he can, obviously, use it when he joins another organisation.
From India, Kannur
4248From India, Kannur
A non-compete clause militates against the Fundamental Right guaranteed by the Constitution granting freedom to pursue business, profession, or avocation of one's choice subject to reasonable restrictions in this regard. As per the Contract Act 1872, there cannot be a valid contract which goes against the statutes. Thus, while there cannot be a total embargo on such employment, a limited restriction for 2/3 years for seeking employment with competing firms in the employment contract has been upheld by the courts. You may consider framing your non-compete clause in the above light.
Since there is no such clause, you may have to issue an order amending the service conditions accordingly. This has to be brought to the attention of all employees.
Having a non-compete clause is one thing but implementing it is the bigger challenge. How are you going to keep track of the exited employees? You may limit the scope of the non-compete clause to the critical resource persons, and if so, inform them in person and take their acknowledgment of the order in this regard.
From India, Mumbai
Since there is no such clause, you may have to issue an order amending the service conditions accordingly. This has to be brought to the attention of all employees.
Having a non-compete clause is one thing but implementing it is the bigger challenge. How are you going to keep track of the exited employees? You may limit the scope of the non-compete clause to the critical resource persons, and if so, inform them in person and take their acknowledgment of the order in this regard.
From India, Mumbai
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