• Non-competent clause

Hi, 
After joining a company A, after 1 year they asked all employees to sign a non-competent contract. Which states that you cannot join any competitor company after 6 months from last day in office.

Contract also has list of companies and a sentence that company is not limited to this list.

After leaving from company A, I joined a company B which works in same domain but is not in the list in contract.

Now, they are not giving full and final amount, relieving & experience letters, as HR said that I have joined a competitor company and might take legal action against me.

Please suggest if they are right and I will not get fnf, letters and i might also get in trouble.
Asked 7 years ago in Labour

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11 Answers

Dear Client,

Non-competent clause not maintainable and enforceable in India, so no legal action against you and complain to labor commissioner for release of F & F settlement. 

 

Yogendra Singh Rajawat
Advocate, Jaipur
23083 Answers
31 Consultations

Nothing doing, don't afraid if your resignation has been accepted you file an application before the Labour Department as such a contract is ultra virus of the constitution.

Koshal Kumar Vatsa
Advocate, Gurgaon
2282 Answers
3 Consultations

You can work in the competitor's firm after leaving the company and you cannot be restrained from doing so as that would amount to an agreement in restrain of lawful profession. But be sure to leave the company as per the rules and intimate them about the illegality of this particular clause by a competent lawyer

Mohammed Mujeeb
Advocate, Hyderabad
19328 Answers
32 Consultations

once you resign you are at liberty to join another organisation 

 

2) under section 27 of contract act any agreement in restraint of trade is void 

 

3)issue legal notice to company to pay your dues , issue you experience letter / relieving letter 

 

4) you can file summary suit to recover your dues 

Ajay Sethi
Advocate, Mumbai
99826 Answers
8148 Consultations

Dear Sir,

Such clause is itself invalid in view of section 27 of Contract Act.  Even if you go as per agreement you joined a company which is not in the exhaustive list.  Either way you are in safe zone.  Get issue legal notice  if you want to recover arrears of salary etc.,

Netravathi Kalaskar
Advocate, Bengaluru
4951 Answers
27 Consultations

Dear Sir,

Kindly update about any clause stating that any other companies not listed but seems to be competent company in your Non-Competent contract, if so, there will be a issue.

No such declaration, then no issues. 

 

Just go through the contract and find out.

G Suresh
Advocate, Chennai
394 Answers
5 Consultations

See the list as per the agreement was not exhaustive and company work in same domain the company can claim dmages from you . So better you take step issue them notice for experience letter and full and final payment stating that company is under obligation to lay you your payment and you have not joined the company which is not listed in agreement. Though keep in mind company can take steps.


Further donot worry there is no trouble they can only file civil suit which can be contested.

Shubham Jhajharia
Advocate, Ahmedabad
25513 Answers
179 Consultations

No they are wrong it's just illegal, don't worry send them a legal notice to clear the same. Else Approach labour court

Prashant Nayak
Advocate, Mumbai
34550 Answers
249 Consultations

A 'Restraint of Trade' clause in a contract that is intended to not allow one party to practice a certain profession, trade or business is only valid under certain conditions of the given and is otherwise void as per Section 27 of The Indian Contract Act, 1872.

Employees that enter into a contract with an employer may agree to neither compete with the employer nor join a competitor during their term of the employment and/or a period after. A contract or part of a contract that is not valid makes the said clause or agreement itself void and it cannot be enforced in court of law. This limits parties to an extent, depending on the contract, in their ability to restrict certain practices of one party that may compete with the other party, despite their agreement.

Section 27 of the Act that makes a clause of certain intention void and allows it to be valid only when it meets the conditions to be considered as an exception. Courts are obligated to take into consideration the terms of the contract in each individual case and assess the case based on reasonableness, nature of circumstances, and even the nature and relation of the parties in this context. The following interrelated aspects of Non-Compete and Restraint of Trade clauses in employment contracts have been dealt with

 

You may issue a legal notice demanding F&F and other dues to you from the company,. let them give a reply denying the demands citing the said clause, you can approach court for relief and remedy on the above guidelines.

T Kalaiselvan
Advocate, Vellore
90028 Answers
2497 Consultations

Hello

        They are in breach of contract and hence you have a strong case. Send them legal notice and if they do not respond then file a case in the labour court.

Regards 

Rahul Mishra
Advocate, Lucknow
14114 Answers
65 Consultations

Send them a legal notice, as this non compete clause, prima facie appears to be hit by section 27 of the Indian contract act. Send your ex employer a legal notice in the present matter, seeking immediate release of all your official documents and dues.

Vibhanshu Srivastava
Advocate, Lucknow
9763 Answers
323 Consultations

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