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Mohana Sundaram (Manager - Corporate HR)     16 June 2014

Explanation on nda

Dear All,

 

I am really blessed to be a member of this forum. I got ample answers on my previous query which make me to post more and hence I am writing now...

Coming to the point ... If an employee sign a NDA which has few tricky things in it, and say if there is a breach does he/she liable to the company legally. 

Employee signed in a plain black and white paper  (letter head)which has the terms & conditions in it and it is not a bond paper or in a letter head. 

Please find below the list of notable areas in the NDA. I would request any of you to give me a valid solution or a loop hole which we have over here.

Main Clause:

During  the  course  of  employment  with  the  Company,  you  will  acquire,  gain,  generate,  gather  and develop  knowledge  of  and  be  given   access  to  business information about products activities,  know – how,  methods  or  refinements  and  business plans  and  business  secrets  and  other  information  concerning  the  products / services business  of  the  Company,  hereinafter  called  the  “SECRETS”.  You will be liable for prosecution for damages for divulgence, sharing or parting any of such information during course of employment and on cessation for at least 2 years period.

 

 

During the course of employment with the Company, you will acquire, gain, gather and develop knowledge of our clients and our competitors hereinafter called the “CLIENT AND COMPETITOR SECRETS”. You will be liable for prosecution for damages for seeking employment or getting employed with any client of  or any competitor of  directly/ indirectly or divulgence, sharing or parting any of such information during course of employment and on cessation for at least 2 years period.

If an employee sign this cant he/she seek an opportunity with competitor or with Client if so what are all the gaps which we have to  work with. Please advice



Learning

 7 Replies

Badrinath (Sr. Manager - Global HR Compliance)     16 June 2014

Hi -

In my opinion, this should be covered under a Covenant that could be an Annexure to the main agreement.

Badrinath

Kumar Doab (FIN)     17 June 2014

Just by inserting and terming anything as a ‘Secret’ it won’t necessarily become a ‘Secret’ or ‘Trade Secret’. The information that flows in handling day to day job functions or counters of the company may no necessarily be a ‘Trade Secret’……………..

A ‘Secret’ should be clearly distinguishable from generic information and must be indeed a ‘Secret’………………..proprietary…………………………patent……………etc…

You must remember that if anything and everything is a ‘Secret’ then one fine day employer would need ‘Robots’ to perform even petty jobs………………………………One employee entangled in litigation (if that is the ultimate purpose of drafting such agreements) then you shall be scaring the community of employees and the talented, self motivated, performers, those capable of delivering, would be distant from you   and you shall be getting either mediocres or shrewd ones that would know how to handle such things and litigation won’t cause any fear for them………..

 

 

The Indian Courts of law have consistently been declining to grant injunctions and enforce Non Compete Clauses/Agreements as it hits right to earn livelihood and clauses of Indian Contracts Act………………….Therefore what is the use of inserting such T&C and agreements that are not even worth the paper on which these are written.

 

 The notice period is not dependant on T&C inserted by employer in appointment letter, contract of employment, any private agreement drafted by employer and signed with employee……………………………………..it is part of service conditions and service conditions are governed by  various enactments, statues, instrument of law applicable to the establishment.

Your company shall be most probably covered by Shops and Commercial Establishments Act that was enacted to govern service conditions in such establishments.

 

 INTRUMENT OF LAW/STATUE SHALL PREVAIL UPON ANY PRIVATE AGREEMENT THAT EMPLOYER HAS SIGNED WITH EMPLOYEE BE IT APPOINTMENT LETTER, CONTRACT OF EMNPLOYMENT, any agreement………………………..any service condition incosistent with INTRUMENT OF LAW/STATUE shall not survive. Emplyer personally is held responsible for faithful observance of INTRUMENT OF LAW/STATUE………………………………….employer shall transfer the onus on hr/legal cell personnel……………………………hence such personnle shouild neither advise the employer to violate nor take onus of them.

 

LIkewise as per various statues, ENACTMENTS payment of wages has to be made on time or employer can be penalized say Rs.7500/instance……………..

the deduction from wages is also well defined in enactments…………..………….and nothing toher than that can be deducted.

Unpaid wages is debt on employer abd employees have been successfully complaints u/s 406,420……………………………..and Winding Up petitions.

 

 https://www.lawyersclubindia.com/forum/3-notice-period-relaxation-advice-103873.asp#.U5_b75SSwb8

https://www.lawyersclubindia.com/forum/Notice-period-102337.asp#.U5_cl5SSwb8

YOU MAY GO THRU MANY OF THE THREADS E.G. AND PICK UP POINTS USEFUL TO YOU….

 

https://www.lawyersclubindia.com/forum/Notice-period-102337.asp#.U51N3pSSwb8

https://www.lawyersclubindia.com/forum/Whether-notice-period-has-to-be-given-during-probation-91808.asp#.UwDFP0eBmXU

https://www.lawyersclubindia.com/experts/Employer-not-giving-relieving-letter-476871.asp#.U51fPpSSwb8

 

        Designation alone does not decide an individual is covered “Workman’ Employee’ or not.

You can not prohibit any employee at any level to form council or union or ‘Works Committees’ or become their member or of Trade Unions…………..

‘Works Committee’ is an authority as in ID Act…………………………….and how can you deny it?????????

 

Who has drafted this agreement and have you in fact enforced it?

If yes you shall be providing meritorious opportunity to Trade Unions and unions are usually unforgiving in such matters.

Moreover it is not mandatory to lodge complaint in writing in such matters……………………………..even an anonymous phone call is sufficient………………………….and also Lawful authorities are bound to take Suo Motu notice of such violations……………… 

1 Like

Mohana Sundaram (Manager - Corporate HR)     17 June 2014

Dear Sir,

 

Thanks much for your response. I really appreciate your response also I am very much thankful to you. Yes we implemented this in our company and as you said we are into Shop & Establishment Act. I have one more doubt which is "If i sign this NDA which means i cannot work to any of competitor or Client and that too directly or indirectly" My question how i could switch my career because of signing this. Cant i work with Client/competitior directly or indirectly. If i work and if they launch a complaint what are all the loop holes which i have where i could get exempt of. 

 

Request you to consider this and respond back.

Sudhir Kumar, Advocate (Advocate)     17 June 2014

well elaborated by Mr Kumar Doab.  Nothing more to add.

Kumar Doab (FIN)     17 June 2014

Any employer would want HR personnel to handle legal points as well and save the cost…………………………., and that is why more and more number of HR personnel are visiting LCI too…………………and other legal forums.

Any employer would want an HR personnel to handle IR as well that is altogether different skill set………..

Any employer would want HR personnel………………………and why HR personnel even legal cell personnel to be his executioner…………………

Every sensible HR personnel that is also an employee……………………………….and therefore every sensible employee shall not offer his neck for employer.

Employment is not marriage………………………..Employers do not marry employees…………………………hence  employees should also understand the employment from the same perspective……………………

There are instances and threads to indicate that employee, their unions, and their lawyers do not hesitate to include the HR personnel amongst the list of ‘Noticees’

and pull them to court of law, lawful authorities…………….

If this employer is not the one that would observe ‘Good HR Practices’ then MOVE ON!

 

 

Kumar Doab (FIN)     17 June 2014

By the time I submitted my last post………………….You have modified your last post.

----Initially it was:

Dear Sir,

 

Thanks much for your response. I do understand and agree on this but if a management would like to have this we are helpless and hence i requested for an update on the loop hole where we could work through. Please help me on this. If an employer file a case against any employee with this particular NDA how strong it would be.

 

----After modification now your query is:

Dear Sir,

 

Thanks much for your response. I really appreciate your response also I am very much thankful to you. Yes we implemented this in our company and as you said we are into Shop & Establishment Act. I have one more doubt which is "If i sign this NDA which means i cannot work to any of competitor or Client and that too directly or indirectly" My question how i could switch my career because of signing this. Cant i work with Client/competitior directly or indirectly. If i work and if they launch a complaint what are all the loop holes which i have where i could get exempt of. 

 

Request you to consider this and respond back.

 

 

Implying you, yourself is the affected employee.

Usually a sensible employer shall limit the tantrums to making phone calls, sending emails………………………and in some cases some employers are known to issue letters, notices, legal notices, and even file a court case……………………………..

Once the matter is in court of law………………………….the decision is pleasure of court of law.

 

YOU may AS AP meet a local lawyer handling and well versed such matters with all docs on record and give inputs in person…………………………and proceed under expert advise of your lawyer.

 

A competent lawyer shall be able to defend your interest.

 

 

1 Like

Mohana Sundaram (Manager - Corporate HR)     18 June 2014

Dear Sir,

Once again thank you so much for your time in explaining me in detail on my queries. I am very much pleased and have great confidence to step forward. 


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