Re: inserting certain clause in the appointment letter
SAM
(Querist) 08 April 2014
This query is : Resolved
Dear All Learned Experts,
I have a question below:
Can a company insert certain condition/Clause in appointment letter that after leaving/quitting the company, the employee cannot join the competitor company for a period of 6 months or so. Whether this condition is valid in the appointment letter? How far this clause is valid in the appointment letter?
Request to Ld. Advocates to kindly reply.
Regards,
Sam
Guest
(Expert) 08 April 2014
The query is of acdemic nature. However, it is not wrong to put a non-competitor clause in the appointment letter.
Guest
(Expert) 08 April 2014
The query is of acdemic nature. However, it is not wrong to put a non-competitor clause in the appointment letter.
SAM
(Querist) 08 April 2014
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.
Article 21 of the Constitution of India guarantees the live to livelihood and since it is a fundamental right it is held to be inviolable. This makes the enforcing of non compete clauses in India even more of a difficult task.
Guest
(Expert) 08 April 2014
Mr. Sam,
Through your original post, you did not discuss any real problem, which you would have been facing. That is why I clearly termed your query to of academic nature.
In fact experts here avoid replying academic queries as that results in to several supplemeatary queries subsequently, like you have posed referring to sec. 27 of the Indian Contract Act without going through deeply the meanting of the said section.
So, do you believe rendering service to assist an employer also falls within the ambit of profession, trade or business? If so, would you like to quote the relevant section of the Indian Contract Act, which treats the service rendered to some business entity as some profession, or trade or business on the part of the employee or any other Act to that effect?
Further, when as per your statement, "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," you know some fact, what made you post such a query? Instead, you could have posted the references of such case laws for the knowledge of once and all.
Further, you are misquoting Article 21 of the Constitution by linking that to livelihood, while the said clause pertains to the protetion to life, not to employment or job, or livelihood, and states as follows:
"Protection of life and personal liberty No person shall be deprived of his life or personal liberty except according to procedure established by law."
So, instead of trying to mislead the community or to test the knowledge of experts, better discuss your real problem, rather than unduly extending thread to make a hodgpodge of baseless ideas to confuse you more on your own specific problem.
SAM
(Querist) 08 April 2014
Dear Sir,
I have been told by my HR Department whether inserting ‘non compete’ clauses in the appointment letter and signing such appointment letter by the employee bind the employee from joining the competitor company after resignation letter is given by the employee to the company?
How far this clause is valid in the appointment letter? (that after leaving/quitting the company, the employee cannot join the competitor company for a period of 6 months or so. Whether this condition is valid in the appointment letter?)
Can a company sue the employee for breach of the terms and conditions mentioned in the appointment letter?
Guest
(Expert) 08 April 2014
Still a general question of academic nature, not any specific problem case. However, what about your case laws, which you referred in your earlier post? You may better discuss implication of individual case laws with particular reference to the nature of business of your company and whether exactly similar products which other companies manufacture.
Moreover, your company can well afford hiring of services of some expert on service laws vis-a-vis the contract law.
Devajyoti Barman
(Expert) 08 April 2014
It should have been posted in Forum, not in Expert section.
Kumar Doab
(Expert) 10 April 2014
The posts are self explanatory.
The specific issue if any may be posted.
Otherwise the case laws referred to by you have provided an answer also.
Advocate. Arunagiri
(Expert) 10 April 2014
Non compete clause is not valid. The employer can control the employee as long as he is in his service.
Once the employee is out of his hands, the employer looses the control, so, the non compete clause is invalid.
