Hi All, I worked for a mnc company 1.5yr.
I have resigned from the company served notice period and I have handed over all responsibilities properly. Now I have required Relieving letter and experience certificate.
My Manager and Director are asking me to accept and asking to put signature on a new contract non competitive agreement for 3 years. There is written I can't work for any competitive company for next 3 years. I was shocked when I seen the agreement. There was non competitive clause on Appointment letter conditions for 6months only but now they are asking me to do sign and accept for 3 years otherwise they can't give me my realiving letter and experience certificate.
I already resigned and my notice period has completed.
Pls guide me what to do and how can I get those documents.
Thanks.
Asish
From India, Chennai
1I have resigned from the company served notice period and I have handed over all responsibilities properly. Now I have required Relieving letter and experience certificate.
My Manager and Director are asking me to accept and asking to put signature on a new contract non competitive agreement for 3 years. There is written I can't work for any competitive company for next 3 years. I was shocked when I seen the agreement. There was non competitive clause on Appointment letter conditions for 6months only but now they are asking me to do sign and accept for 3 years otherwise they can't give me my realiving letter and experience certificate.
I already resigned and my notice period has completed.
Pls guide me what to do and how can I get those documents.
Thanks.
Asish
From India, Chennai
Dear Asish
,
Earlier, I had shared link about verdict of the Delhi High Court on the subject above. Click the following link to refer it:
https://www.citehr.com/571397-delhi-...n-compete.html
At this stage, getting relieving letter is important. Therefore, you may sign the agreement, if any. Join the competitor if you wish to. If they send you lawyer's notice then you may quote the above ruling by the Delhi High Court.
If you wish to quote the verdict of the Delhi High Court then you may do so however, your employer could get incensed for being challenged and may create problem in Background Verification (BGV). Therefore, be cautious on that count.
Thanks,
Dinesh Divekar
From India, Bangalore
,
Earlier, I had shared link about verdict of the Delhi High Court on the subject above. Click the following link to refer it:
https://www.citehr.com/571397-delhi-...n-compete.html
At this stage, getting relieving letter is important. Therefore, you may sign the agreement, if any. Join the competitor if you wish to. If they send you lawyer's notice then you may quote the above ruling by the Delhi High Court.
If you wish to quote the verdict of the Delhi High Court then you may do so however, your employer could get incensed for being challenged and may create problem in Background Verification (BGV). Therefore, be cautious on that count.
Thanks,
Dinesh Divekar
From India, Bangalore
Dear Asish,
I would also like to join with our learned friend Dinesh on the subject-matter of enforceability of Non-Compete Clause in any contract of employment in India. Article 19(1)(g) and 21 of the Constitution of India guarantee the fundamental right to practice profession and right to livelihood. Therefore, a restraint of trade clause in a contract that is intended not to allow one party to practice a certain profession, trade or business is only valid under certain circumstances and reasonable restrictions. In the absence of such reasonableness in the restrictive covenants, the contract would become void as per sec.27 of the Indian contract Act,1872.
The following are the important aspects which would help to determine the reasonableness of such restrictions viz.,
(a) Distance i.e appropriate restrictions on the employee which may prohibit from practicing some profession within a reasonable stipulated distance.
(b) Time Period/ Limit - a reasonable period during which such prohibition may last without affecting his livelihood.
(c) Trade Secrets i.e reasonable restrictions on disclosing trade secrets in the case of Key employees
The negative non-compete covenants used in employment contracts can be broadly classified into Term Covenants and Post - Term Covenants. In accordance with the Indian Contract Act, such non-compete restrictions imposed on employees during their employment are reasonable and enforceable whereas the ones that apply to post employment period are void.
As early as in 1954 itself the Apex Court held in Satyavrata Ghosh v.Kurmee Ram Bangor (1954 SCR 310) that a covenant is void when it restrains the employee from work in the future after termination of his service. The same court held again in Niranjan Shankar Golikari v.The Century Spinning AND Mfg Co., ( 1967 SCR (2) 378 )that non-compete clauses are not to be considered as "restraint of trade", if they operate during the time period of employment and such injunction is restricted to nature of employment, time and area.
Regarding nature of employment, Indian Companies classify employees based on their role, position and the degree of confidentiality expected of them as Key-Employees and Non-Key Employees. Generally, Key-employee contracts provide for non-compete restraint during employment along with a "Garden Leave" or a fixed term. The Bombay High Court held in V.F.S Global Services Ltd., v. Suprit Roy [ 2008(2) Bom CR 446 ] that a fully paid 3 months " Garden Leave " agreement with a manager did not renew a contract and as such constituted a restraint of trade which is unenforceable.
Here it is worth to quote the following observation of the Delhi High Court in Pepsi Foods Ltd & Others v. Bharat Coca Co;a Holdings Pvt Ltd & Others (1999 LLR 1027 ):
" The negative Covenants restraining employees from employment elsewhere
is "ECONOMIC TERRORISM"
Therefore judiciously weigh the options suggested by Mr.Dinesh Divekar.
From India, Salem
I would also like to join with our learned friend Dinesh on the subject-matter of enforceability of Non-Compete Clause in any contract of employment in India. Article 19(1)(g) and 21 of the Constitution of India guarantee the fundamental right to practice profession and right to livelihood. Therefore, a restraint of trade clause in a contract that is intended not to allow one party to practice a certain profession, trade or business is only valid under certain circumstances and reasonable restrictions. In the absence of such reasonableness in the restrictive covenants, the contract would become void as per sec.27 of the Indian contract Act,1872.
The following are the important aspects which would help to determine the reasonableness of such restrictions viz.,
(a) Distance i.e appropriate restrictions on the employee which may prohibit from practicing some profession within a reasonable stipulated distance.
(b) Time Period/ Limit - a reasonable period during which such prohibition may last without affecting his livelihood.
(c) Trade Secrets i.e reasonable restrictions on disclosing trade secrets in the case of Key employees
The negative non-compete covenants used in employment contracts can be broadly classified into Term Covenants and Post - Term Covenants. In accordance with the Indian Contract Act, such non-compete restrictions imposed on employees during their employment are reasonable and enforceable whereas the ones that apply to post employment period are void.
As early as in 1954 itself the Apex Court held in Satyavrata Ghosh v.Kurmee Ram Bangor (1954 SCR 310) that a covenant is void when it restrains the employee from work in the future after termination of his service. The same court held again in Niranjan Shankar Golikari v.The Century Spinning AND Mfg Co., ( 1967 SCR (2) 378 )that non-compete clauses are not to be considered as "restraint of trade", if they operate during the time period of employment and such injunction is restricted to nature of employment, time and area.
Regarding nature of employment, Indian Companies classify employees based on their role, position and the degree of confidentiality expected of them as Key-Employees and Non-Key Employees. Generally, Key-employee contracts provide for non-compete restraint during employment along with a "Garden Leave" or a fixed term. The Bombay High Court held in V.F.S Global Services Ltd., v. Suprit Roy [ 2008(2) Bom CR 446 ] that a fully paid 3 months " Garden Leave " agreement with a manager did not renew a contract and as such constituted a restraint of trade which is unenforceable.
Here it is worth to quote the following observation of the Delhi High Court in Pepsi Foods Ltd & Others v. Bharat Coca Co;a Holdings Pvt Ltd & Others (1999 LLR 1027 ):
" The negative Covenants restraining employees from employment elsewhere
is "ECONOMIC TERRORISM"
Therefore judiciously weigh the options suggested by Mr.Dinesh Divekar.
From India, Salem
Dear Ashis,
You have already resigned from your post. Have you any acknowledgement of your letter of resignatiion? Is there any documentary evidence that you have handed over all responsibilities properly?
If yes and you are sure that all the formalities related to your resignation is over, do wait for some time. Then you send a request letter mentioning your date of employment and last working date through registered post to employer that till date you have not received your relieving letter and experience certificate.
The company you would like to join is the competitor to your previous company. You can resort to the suggestion of Mr Dinesh Divakar and take the shelter under the verdict ofthe Hon'ble Delhi High Court.
From India, Mumbai
You have already resigned from your post. Have you any acknowledgement of your letter of resignatiion? Is there any documentary evidence that you have handed over all responsibilities properly?
If yes and you are sure that all the formalities related to your resignation is over, do wait for some time. Then you send a request letter mentioning your date of employment and last working date through registered post to employer that till date you have not received your relieving letter and experience certificate.
The company you would like to join is the competitor to your previous company. You can resort to the suggestion of Mr Dinesh Divakar and take the shelter under the verdict ofthe Hon'ble Delhi High Court.
From India, Mumbai
Dear Friend,
Please sign the agreement and collect your RL. This post facto no compete is not binding legally. Only thing is that the agreement should have current date after your resignation. Ensure that you dont sign letter anti dated.
Do not show them that you are aware that it is infructuous, quietly sign and get your work done.
Warm Regards
Bharat Gera
HR Consultant
9322404765
From India, Thane
Please sign the agreement and collect your RL. This post facto no compete is not binding legally. Only thing is that the agreement should have current date after your resignation. Ensure that you dont sign letter anti dated.
Do not show them that you are aware that it is infructuous, quietly sign and get your work done.
Warm Regards
Bharat Gera
HR Consultant
9322404765
From India, Thane
Dear All,
(Dinesh Divekar sir, Umakanth sir, prabhat sir and Bharat sir).
Thank you so much for your valuable advice.
First of all my apologies n sorry for my delay reply in this forum.
I have asked Manager to send me scan copy of letters thru email to see the contents but he has denied to do so and he is calling me to come to their office to acknowledge the receipt.
May be I will go this month end.
As prabhat sir asked, yes I have resignation acknowledgement by email cause I gave it thru email only and director has replied to my email.
I have acknowledgement letter of handed over all company property (Laptop,mobile,documents and files).
And my half of the month salary still pending with company. They have to pay me.
Still it's close to 2months of my resignation they didn't paid my dues.
Even I didn't claim my annual bonus yet.
Anyway thank you all for your valuable advice and guidance.
special thanks to Dinesh Divekar sir for his prompt reply.
Thanks.
From India, Chennai
(Dinesh Divekar sir, Umakanth sir, prabhat sir and Bharat sir).
Thank you so much for your valuable advice.
First of all my apologies n sorry for my delay reply in this forum.
I have asked Manager to send me scan copy of letters thru email to see the contents but he has denied to do so and he is calling me to come to their office to acknowledge the receipt.
May be I will go this month end.
As prabhat sir asked, yes I have resignation acknowledgement by email cause I gave it thru email only and director has replied to my email.
I have acknowledgement letter of handed over all company property (Laptop,mobile,documents and files).
And my half of the month salary still pending with company. They have to pay me.
Still it's close to 2months of my resignation they didn't paid my dues.
Even I didn't claim my annual bonus yet.
Anyway thank you all for your valuable advice and guidance.
special thanks to Dinesh Divekar sir for his prompt reply.
Thanks.
From India, Chennai
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