Previous employer sent notice as i joined competitor firm

Rohan Bhatia (Querist) 16 February 2023 This query is : Resolved
My Previous Employer has sent me a legal notice because the employment agreement that I have signed stated that I cannot join any competitor firm for a period of 2 years. So I want to know are such laws legally valid in India and can my previous employer claim any damages.

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An individual has received a legal notice from their previous employer for joining a competitor, citing a 2-year non-compete clause in their employment agreement. Indian law, specifically Section 27 of the Indian Contract Act, 1872, renders such post-termination non-compete agreements void and unenforceable as they are considered a restraint of trade. Courts consistently uphold an individual's fundamental right to earn a livelihood, meaning the previous employer's claim is unlikely to be legally maintainable.

Sudhir Kumar, Advocate (Expert) 16 February 2023
who signed the contract?

Rohan Bhatia (Querist) 16 February 2023
I have signed the employment agreement which is a standard agreement that all employees sign when they become permanent after the probation period

T. Kalaiselvan, Advocate (Expert) 16 February 2023
If you have received any such notice, you can issue a reply notice stating that the previous employer cannot restrict you to pursue your livelihood post resignation.
You are legally free to join any company as per your wish. Section 27 of the Indian Contract Act-1872 provides that ”Every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void”.
Indian law is therefore very clear and strict on this point, any such non compete agreement shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, for such type of agreements it has shown that it has kept such non compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non compete clauses in employment contracts as “restraint of trade” is impermissible under section 27 of the Indian Contract Act-1872, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.
Hence any action taken by your previous employer in this regard shall not be maintainable in law, therefore you can issue a reply to his letter denying his allegations but do not commit anything.

Rohan Bhatia (Querist) 16 February 2023
Thank you so much sir

Dr J C Vashista (Expert) 19 February 2023
What are the terms and conditions of the agreement for your employment, which is binding upon both of you ?
It would be appropriate to consult and engage a local prudent lawyer practicing service matters for proper appreciation of facts / documents, professional advise and necessary proceeding.

Rohan Bhatia (Querist) 19 February 2023
Yes sir i am consulting

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