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Gajender (Sen. Application Developer)     29 March 2012

Bond with company

Hi,


I am facing a critical situation, please suggest me what can i do.


I was working with a company and had signed a bond with them for 1.6 years. I completed the bond and resigned from my services. At the time of termination of my services with them they again asked me to sign a paper and i did. afer that they releaved me.


Now i have joined a MNC and they sent a mail to my previous comapny for the verification but my previous company denied to verify my employment with them by saying that I have broken a contract with them.


Now the MNC is asking me for the NOC from my previous comapnay and the previous company is not giving me NOC saying that you have joined this MNC and it will affect our business, so we cant provide you the NOC.


Condition is:

The consultant cannot engage or take any employment or get hired directly or indirectly with XYZ(COMPANY NAME) clients or its clients, partners, competitorsor any of its affiliates or subsidiaries for the period of three years from the date of termination. Also, can't place or helpZenfocus Software Pvt. Ltd consultants to take position or employment at any other companies during the time of consulting od for the period of thre years from the date of termination.

 

Please suggest me what can i do.

 

Warm Regards:

Gajender
 



Learning

 2 Replies

Kumar Doab (FIN)     29 March 2012

You should agitated in writing to the good offices of the appointing authority, MD, Chairman, Head-HR, Company Secretary, for the act of company thru its personnel ( mentioning name(s), designation, dept.) who obtained your signatures on a blank  paper, in the premises of the company  and should have demanded the paper back.

 

 

Employee should record (audio/visual) such incidences for use at appropriate time in appropriate forum.

You have completed the bond period and you have not joined the new company during the term of your employment bond.

You may build rapport with your current employer and explain to them the facts and your current employer/HR shall understand, and shall let you remain in employment.

Was this clause a part of your appointment letter or it was signed by you on your last day in office, or during the term of your employment? If it was signed during exit process what was the date put on the paper? Have you been given copy of the paper signed by you if not you should agitate to good offices and demand copy say within next 2 days to be supplied by redg. post. You must mention that on this paper your signatures were obtained stating if you do not sign now/then and there ……….shall be done. You may demand examine your personnel file.

Were you fairly compensated for signing on the Non-Compete clause?

It you were made to sign on the clause during your exit process than you have not been compensated for and this shall go in your favor.

Employer should grant reasonable time to study and then sign on the paper. Employee should always consult elders in the family/competent and experienced service lawyer/ trained legal mind, lawyer/law firm before signing on the dotted line. It is economical to consult before hand than to repent later and waste precious business/personal/family hours and hard earned monies.

Some employers know, but don't care, that their non-compete agreements/clauses are not enforceable, in whole or part. They might try to get you to sign on the dotted line anyway. It's an intimidation tactic to protect that for which they have no right to protect. They count on employees not knowing or checking its legality, and take advantage of ill informed employees.

If you loose your job due to adverse comments by your past employer you shall another reason to agitate and sue them.

The are covered in Non compete clause is pan India/global or your city or some defined area?

Courts usually decide that employer can not block the livelihood of their former or current employees.

Kindly approach a competent and experienced service lawyer with all record and give inputs in person.

 


Kumar Doab (FIN)     29 March 2012

 You may study a very interesting and relevant article posted 

By : sanjay kumar

 

at the Article Section of LCI the link for which is given below:

https://www.lawyersclubindia.com/articles/Non-Compete-Clauses-and-The-Indian-Contract-Act-1972-4621.asp

Anti-Competitive Contracts-Per Se Illegal Agreements

By : sanjay kumar

NON COMPETE CLAUSES UNENFORCEABLE IN INDIA

Indian courts have consistently refused to enforce post-termination non-compete clauses in employment contracts, viewing them as "restraint of trade" impermissible under Section 27 of the Indian Contract Act, 1872, and as void and against public policy because of their potential to deprive an individual of his or her fundamental right to earn a livelihood.

Hence the non-compete covenants used in agreements can be categorized into in term and post term covenants. In an employment contract, the basic interests of the employer which are required to be protected include trade secrets and business connections and other such confidential information. In case of restraints in contracts of employment the nature of business and employment is relevant in assessing the reasonableness of restraints. An employee owes a duty to the employer to not disclose to others or use to his own advantage the trade secrets or confidential information which he had access to during the course of employment and he could be restrained from or sued for divulging or utilizing any such information in his new employment. But once again, he cannot be prevented from taking up the employment. Also, the employer cannot prevent the use of employee’s knowledge, skill or experience even if the same is acquired during the course of employment. Restrictive covenants are different in cases where the restriction is to apply during the period after termination of the contract than in those cases where it is to operate during the period of the contract.

 

Negative covenants operative during the period of contract of employment when the employee is bound to serve the employer exclusively are generally not regarded as restraint of trade and do not fall under Section 27 of the Indian Contract Act,1872. A negative covenant, one that the employee would not engage himself in a trade or business or would not get employment under any other employer for whom he/she would perform similar or substantially similar duties, is not a restraint of trade unless the contract is unconscionable or excessively harsh or unreasonable or one sided

CONCLUSION

 

It is well established by the various case laws decided in the courts of India that ‘non compete’ clauses that extend after the termination of employment are not enforceable in India. It is stated clearly in section 27 of the Indian Contract Act, 1872 that agreements in restraint of trade are void. In the garb of confidentiality, an employer cannot be allowed to perpetuate forced employment, as it is hit by Section 27.

 Kindly update the outcome and resoloution of your matter in the forum in this thread as it shall help many who visit the forum.


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