Recently, we came to know that one of our employees started his own organization (Infra Company) in the similar industry and was appointed as a Director. He has been diverting our business contracts to his company, which was proven by us. Eventually, we made him resign and obtained a letter from him stating that he has been appointed as a Director for XXX company with his DIN number details, and asked him to leave. Now, my management wants to withhold 3 months' salary from him or proceed with legal action against the former employee. In light of the above incident, can we pursue legal proceedings against him?
I would appreciate your advice on this matter.
From India, Hyderabad
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1I would appreciate your advice on this matter.
From India, Hyderabad
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If it's mentioned in his appointment letter that he should not work or take up any other employment while in service with you, then you can take legal action against him with reference to the appointment letter.
At the same time, you should have evidence that he is/was working somewhere else while in service with you. You can take legal action against him as his working elsewhere has resulted in a loss to your company. He has violated the clause in the appointment letter which he had signed and accepted.
From India, Bangalore
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At the same time, you should have evidence that he is/was working somewhere else while in service with you. You can take legal action against him as his working elsewhere has resulted in a loss to your company. He has violated the clause in the appointment letter which he had signed and accepted.
From India, Bangalore
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In addition to the above, please ensure whether he is a full-time director or a part-time director? In case of the latter, do your terms of agreement cover it? The best option, however, would be to sort out the matter amicably as a good relationship may prove to be useful later.
Warm regards.
From India, Delhi
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Warm regards.
From India, Delhi
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Dear Rajeev ji, I would like to ask you if there is no such clause in an appointment letter or there is no appointment letter is issued to the employee, in such case what should be done?
From India, Mumbai
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From India, Mumbai
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Hello Venkat,
Like Rajeev Dixit mentioned, does the Appointment Letter cover this aspect?
Also, do you have a Non-Compete Agreement for this position/employee in place?
Now coming to the Plan-of-Action, I think I will be at variance with Raj Kumar's suggestion this time.
Had this employee only joined another job while still serving your company, then 'amicable settlement' COULD be one viable option. But in this case, this employee went far from that step. A lot depends on the 'type' & 'extent' of damage he caused to your company—deeming that damage was indeed done.
And another important aspect—what is the reading of your management regarding the timeframe of the damage caused—meaning is the damage limited to the CURRENT set of contracts or does/could it extend to any future ones too? Given that you are into Infra sector, the chances of long-term damage are high since Infra contracts take a long time to materialize [from start-to-finish]. If such a situation is thought realistic, then suggest going legal without hesitation. You mentioned you also have his DIN details—that should suffice to put this guy in the dock. And this is 'irrespective' of whether the Appointment Letter has the relevant clauses OR NOT—can be pursued independently.
This also brings to the fore the culpability of the company where he is the Director now. If you have sufficient proofs/evidence, then you can as well bring the other directors & the company too into the scene legally—in a way to cover your positions in the contracts under scrutiny.
To some extent, this COULD get covered under Industrial espionage clauses—meaning criminal intent—your advocate would be better placed to suggest these aspects.
So, in a nutshell, this IS NOT just a case of an employee working elsewhere but also to do with company confidentiality & business espionage.
All the Best.
Rgds,
TS
From India, Hyderabad
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Like Rajeev Dixit mentioned, does the Appointment Letter cover this aspect?
Also, do you have a Non-Compete Agreement for this position/employee in place?
Now coming to the Plan-of-Action, I think I will be at variance with Raj Kumar's suggestion this time.
Had this employee only joined another job while still serving your company, then 'amicable settlement' COULD be one viable option. But in this case, this employee went far from that step. A lot depends on the 'type' & 'extent' of damage he caused to your company—deeming that damage was indeed done.
And another important aspect—what is the reading of your management regarding the timeframe of the damage caused—meaning is the damage limited to the CURRENT set of contracts or does/could it extend to any future ones too? Given that you are into Infra sector, the chances of long-term damage are high since Infra contracts take a long time to materialize [from start-to-finish]. If such a situation is thought realistic, then suggest going legal without hesitation. You mentioned you also have his DIN details—that should suffice to put this guy in the dock. And this is 'irrespective' of whether the Appointment Letter has the relevant clauses OR NOT—can be pursued independently.
This also brings to the fore the culpability of the company where he is the Director now. If you have sufficient proofs/evidence, then you can as well bring the other directors & the company too into the scene legally—in a way to cover your positions in the contracts under scrutiny.
To some extent, this COULD get covered under Industrial espionage clauses—meaning criminal intent—your advocate would be better placed to suggest these aspects.
So, in a nutshell, this IS NOT just a case of an employee working elsewhere but also to do with company confidentiality & business espionage.
All the Best.
Rgds,
TS
From India, Hyderabad
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Advertise in the newspapers with his photo stating that XYZ, designation, was an employee of our organization who has left since DD/MM/YYYY. He no longer represents this organization, and anybody dealing with him will be doing so at his sole risk and responsibility.
The next step will be to tighten the employee onboarding process in your organization and review the employment terms and conditions - recast/fine-tune them based on this experience. Since you say he has given his resignation letter, the only thing that you may now do is withhold his notice period salary.
From India, Hyderabad
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The next step will be to tighten the employee onboarding process in your organization and review the employment terms and conditions - recast/fine-tune them based on this experience. Since you say he has given his resignation letter, the only thing that you may now do is withhold his notice period salary.
From India, Hyderabad
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Dear Rajeev ji,
I would like to ask you, what should be done if there is no such clause in an appointment letter or if no appointment letter is issued to the employee?
Sachin Kumar Sharma
Advocate
From India, Mumbai
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I would like to ask you, what should be done if there is no such clause in an appointment letter or if no appointment letter is issued to the employee?
Sachin Kumar Sharma
Advocate
From India, Mumbai
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Although the views expressed by Mr. Hansdah and Mr. Tajsateesh are totally different, I cannot help but agree with both of them! Both suggestions are worth exploring. Say if the person has good contacts and good PR, then why not think of making him a franchisee to expand your business further? It may lead to a win-win situation. For that, an effort to sort things out amicably may work in your favor. However, if his attitude is 'do whatever you want, I am least bothered' type, then be strict and fight it out just as Mr. Tajsateesh has suggested. All the best!
S.K.LIMAYE/MBA
From India, New Delhi
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S.K.LIMAYE/MBA
From India, New Delhi
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