Any agreement in restraint of trade is void under provisions of section 27 of Indian contract act
Enforceability of non-compete clause
I am working with this company from last 8.5 years and this particular client X from last 5 years. The X has even approved my onsite as well in July 2022. But unfortunately due to the bad culture at work I had to resign and literally no other reason. Now I am thinking about moving to the city where my client X has the base and I thought joining this client X is my easy way into that city so what's wrong if I join them ? Here I cannot join my client X directly, I have to be hired some other 3rd company and that company will outsource me to this client X . I am not sure if this 3rd company is currently a vendor for my client X. Coming to trade secrets issue, there are no trade secrets we do what our client says.
Asked 14 days ago in Labour
13 answers received from multiple lawyers
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13 Answers
1. You can join client "X" directly as the non-compete clause is not legally valid and binding on you, as you are not a bonded labourer.
2. It has been held by various courts that non-compete clause is against the interest of the employee.
Dear Client,
If you have signed any agreements with your current company that might restrict you from working with clients or competitors after leaving. Non-compete or non-solicitation clauses could pose legal issues if not navigated properly. Joining Client X through a third-party company might introduce some complexities. Ensure that the third-party company's arrangement with Client X doesn't conflict with your previous employment agreements or ethical considerations. Even if there are no explicit trade secrets involved in your work, joining a client could raise ethical concerns, especially if you were privy to sensitive information about your previous company's operations or plans. Make sure you're not breaching any confidentiality or loyalty obligations. Consider how your decision to join Client X might impact your professional reputation within your industry. Moving to a client after leaving a company could raise eyebrows among your peers or potential future employers.
As per laws in India, any obligation of non-competition which extends beyond the term of employment is void and not enforceable.
Non-compete obligations are enforceable only during the term of employment but not once the employment comes to an end.
The Indian Contract Act, 1872, prohibits any agreement that is in restraint of trade. Therefore, any obligation of non-competition that extends beyond the term of employment is void and not enforceable.
It will not come under competing clause
- As per Section 27 of the Indian Contract Act-1872 ,every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void, except the one who sells goodwill of a business with a buyer to refrain from carrying on a similar business within specified local limits so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein provided that such limits appear to the court reasonable, regard being had to the nature of business.
- Hence, this clause not applied in your case
non-compete clause - not legal in India.
My client X didn't sign any agreement with me to not hire our colleagues. But they have good relationship and dependency on our company. So if I join X will my company be able to do anything to the X legally like issuing notice or cancelling contract with X etc ? Just trying to understand will my client gets into any trouble if I join them ?
Asked 11 days ago
Company will proceed legally against you and not against X
The agreement between your client and the company, if silent on such aspects then your company cannot take any legal action against them for this reason.
No legal action will be maintainable.
Your company may issue legal notice to 'X' company threatening to cancel contract with 'X' if you join 'X' company. But enforceability of non-compete clause through courts would not be legally favourable.
No
Dear Client,
If you have signed any non-compete or non-disclosure agreements with your current employer, joining X could potentially violate those agreements, especially if you're taking sensitive information or trade secrets with you. If it can be proven that X hired your colleagues with the intent to interfere with your company's business relationships, your company might have a legal basis for pursuing action, such as tortious interference with contractual relations. However, this would likely require strong evidence of malicious intent. If it can be proven that X hired your colleagues with the intent to interfere with your company's business relationships, your company might have a legal basis for pursuing action, such as tortious interference with contractual relations. However, this would likely require strong evidence of malicious intent. Consider the potential impact on the relationship between your company and X. While legal action may be an option, it could damage the goodwill and trust between the two parties, potentially leading to long-term repercussions for both parties.
No they will not have any trouble