Employer Non-Compete Agreements


Section 27 of the Indian Contract Act has a general block on any agreement that pre-trade restricts. [15] On this basis, all competition bans in India appear to be invalid. However, the Indian Supreme Court has clarified that certain non-competition clauses may be in the interest of trade and commerce, and such clauses are not excluded by Section 27 of the Contracts Act and are therefore valid in India. [16] It should be noted that there are only clauses that are supported by a clear objective, considered advantageous for trade and commerce, this test. For example, a co-founder of a startup who has signed a non-compete clause may stand,[17] but if a junior software developer or call center employee signs a non-compete clause with the employer, this might not apply. As a general rule, prohibitions on competition benefit a company, not individual workers. The longer the conditions of a non-competition clause and the longer it remains in force, the greater the negative effects of the agreement on the worker. That`s why California courts don`t up hold the competition bans because they could hurt a worker`s ability to support themselves. Many people also believe that competition bans stifle innovation.

It is important that courts often take into account these factors: geographical scope, duration, nature of obligations and reduced counterparties – one in relation to the other. For example, a broad geographic scope – say an entire state – may be more applicable if the duration of the restriction is short – say a month. On the other hand, a wide geographical area, coupled with a long period of prohibition, is more likely to be found unenforceable by a court. In looking at geographic scope, the courts look at the services provided by the employer. The court generally does not allow a non-competition clause preventing a worker from working in an area where the employer is not working. A non-competition clause should include a clause allowing an employer to sign the former worker or grant him permission to work for a given company in a given region, to set up a competing company in a cooperative manner, etc. .

Posted Saturday, September 18th, 2021 at 3:38 pm
Filed Under Category: Uncategorized
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