What is a non-compete clause in an employment contract?

What is a non-compete clause in an employment contract?

A non-compete agreement is a legal agreement or clause in a contract specifying that an employee must not enter into competition with an employer after the employment period is over. Employers may require employees to sign non-compete agreements to keep their place in the market.

Can employee join competitor company?

You can leave your employment and join a competition organization and there is no illegality in it. Even if there is a contract restricting you to join a competitor, then such contract becomes void.

Can a company stop me working for a competitor?

A restriction in the contract of employment preventing you from working for a competitor after leaving your current employment is called a ‘restrictive covenant’ or ‘restraint of trade’ clause. The wider the scope of such a clause, the less likely it is to be enforced.

What is a restrictive covenant in an employment contract?

A restrictive covenant is a clause in an employment contract or services agreement that works to prohibit an individual from (among other things) competing with his or her ex-employer for a certain period after he or she has left the business.

Can employer Sue employee for joining client India?

The employer is free to file a lawsuit for injunction to restrain you from working with this client. In addition to this, it may also claim compensation from you for violating the clause, which you can contest in defence.

Is non-compete clause legal in India?

From an Indian legal perspective, the Non-compete clause is prohibited under the Law of Contracts. 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.

Can a company restrict its employees from joining the same client through a different company?

14 Answers. 1. Since both the entity are different from each other there is no restriction for you to Join the Indian firm. Non-compete clauses are ordinarily not enforced by the Indian courts as they restrict business and trade but in some cases they may be enforced.

Are employment restrictive covenants enforceable?

How enforceable are restrictive covenants? The general position is that post-termination restrictive covenants are void on public policy grounds as being in restraint of trade, unless they are being used by the employer to protect a legitimate business interest.

Are employment restrictive covenants legal?

Restrictive covenants can be utilised in employment contracts; however it is vital that any employer looking to protect their business by these measures ensure such restrictions are reasonable in order for them to be enforceable through the Courts.