jobs_india
Manager
Dear Sir,
I am working with an organization based in Delhi/NCR Region. I was asked to sign a bond with the company on A4 size paper which prohibits me from joining their competitors for a period of 1 year after leaving the job. The names of the competitors are also mentioned.
The company asks employees to sign on a stamp paper when they put their resignations else refuse to accept the resignation and don’t give the relieving letter and dues.
On breach of the agreement company also asks employees to pay amount equivalent to 1 year pay.
However the company did not impart any additional or special training and thus did not incur any additional cost on training me.
Please advice.
Kindly also note that most of the interview calls which I get are from the companies which are mentioned by my employer as their competitors.
Regards
Sachin

From India, New Delhi
tajsateesh
1626

Recruitment/Talent Acquisition, Career counselling & Startup Advisory Services
Hello Sachin,

Pl note that the situation you mentioned is pretty common among domains/sectors where there are limited players. This is also common for specific positions/functions, that as per the company's view, are CRITICAL to their operations & such an employee joining any competitor would be detrimental to THEIR interest.

In short, this is called the Non-Compete Clause.

And this is different from the Bond you spoke about--which is usually linked to any Training given by the company.

HOWEVER, there's a difference in what your company is practicing & the general accepted Industry Practice of the Non-Compete Clause--this is a part of the Offer/Appointment Letter & NOT the resignation process. Any person is expected to join any company AFTER going thru ALL the relevant Clauses & Conditions of Employment--of which clauses like this also form a part [another common clause being Non-disclosure].

Legally, being asked to sign the Non-Compete Clause AFTER resigning is UNTENABLE.

Suggest pl wait for the legal members of this Forum to respond--they will be able to give you better suggestions. But I guess you will need to consult an advocate for sure.

All the Best.

Rgds,

TS

From India, Hyderabad
ukmitra
297

Business Development, Employee Relations, HR operations, Policies, Recruitment, Administration
Hi Sachin,
Such a bond will not hold good in Court of law in India and Supreme Court and other lower courts in india have thrashed down such draconian policies of companies. So, currently, such bonds are but just a way to terrorise employees on forcing them "not resign".
We have discussed in length in various discussions in Citehr forum with experts comments, which you can research for your information.
My suggestion, don't worry much about such bonds, but be loyal to your ex-company and do not disclose any of their trade secrets to their competitors at any cost. When you resign from such companies, maintain absolute discrete in movement to your new company and job.
Wish you all best,
Ukmitra

From Saudi Arabia, Riyadh
varghesemathew
906

Now freelance consultant in Labour law/HR
This issue was discussed threadbare earlier .This type of bonds are illegal. Varghese Mathew
From India, Thiruvananthapuram
jobs_india
Manager
Dear Sir,
I will like to further add a few more points:-
The clause prohibiting the employees from joining competitors are there in the appointment letters of all the employes of this company and this is not limited to any specific positions / functions.
I am in the role of a assistant manager in marketing and hence don't have any access to the trade secrets of the company.
The clause prohibits employees from joining competitor companies even in other functions / business areas rather than just the verticals / functions which are in direct competition of my employer.
Thanks
Sachin

From India, New Delhi
saswatabanerjee
1975

Partner - Risk Management
Sachin,
As explained by others and also reported in other discussion of this forum, the so called restrictions are not enforceable and you can go ahead and join any of the mentioned companies. The company can do nothing to stop you.
Even the signature in stamp paper is invalid as it comes under the rule of coercion.
If possible take a copy of the bond you sign.
On the practical side, go ahead and sign any bond they give you are resignation, take the relieving letters and do what you want after that. If they do file a case, you can get any decent lawyer to get the same dismissed and recover cost of the same from the employer. But I don't think they will even file a case against you for this. Heir lawyers also know its not tenable.

From India, Mumbai
anil.arora
659

Administration & Liaisoning Head
Hi Sachin,

Well I would say that there is no need to accept such conditions by employer which is totally unethical and unprofessional and must inform to Labour Inspector /commissioner immediately with written complaint of minimum 10 employees of your company to seek help in this regard.

Second, I totally agree with Ms Saswata that Company has no right to force such condition to employee in any case but if such conditions has applied or introduced in the appointment/employment letter, and employees were agreed to the same by signing bond at the time of joining, can do so.

“Hope there is nothing mentioned in the appointment letters of employee like Employer deserve the right to retain employees and hold/refused their clearance until such bond conditions gets acceptable by employees”. if there is nothing like you and other employees of this organization are advised to not sign any bond while resigning. And when employer refuse to give clearance to their exit even after following the terms of leaving/notice period, needs to file a written complaint as stated above.

However, I buy that due to tough completion, allurements to employees by competitors became a common trend in the market or “How to poach an employee from a Competitor” became a common practice which is one of the big Attrition /High Employee Turnover problems today but still such style, to fight with this problem, is not acceptable.

I’d request you to file a written complaint to Labour Inspector/Commissioner else need to go with the provided suggestions by Mr Ukmitra and Ms Saswata which are practical and valid.

Best of Luck

From India, Gurgaon
Prasad62
17

HR professional
Hi
As rightly pointed out by other members, these kind of bonds and declarations have no legal sanctity and hence cannot be executed by your employer. Which means that they cannot force you or get a court decree forcing you to pay uo any money as agreed in the bond or otherwise.
It is just a psychological deterrant. If not every employee, atleast a few will be intimidated by a paper tiger. As an employer, that is slightly better situation over having none to bother! They are trying to put a fear in the mind and this is neither uncommon nor significantly draconian.
Cheers


phanikumar_d66
15

DGM-HR
Employment is a contract between the employer and employee for some consideration for both. Employer can not force his employees to sign any kind of bond which is detrimental to the interests of the employee. Employee is free to join any company by leaving the present company he is working in after legally getting relieved.
Pl note that any agreement in restraint of employment is void under the Indian Contract Act.
D. Phani Kumar
DGM- HR
Vasavadatta Cement
(A Unit of B.K. Birla Group of Companies)
Sedam
Gulbarga Dist.
Karnataka.


saikatdhar
3

Litigation, Statutory Compliance, Drafting of Contracts, Industrial Relations & State Liasion
Well Mr. Sachin!!!

you are in a big trouble now?? its it??

What my other friends wrote is absolutely correct. these kind of bonds are not legal. So what??

what they could not visualise is that how to go ahead with this. you sign the bond with closed eye and grab this opportunity to take a hike from the prospective employer also. tell them - Sir i am very much interested to work with you only and you only. I will never go to any of your competitors including those whose name is not there in the list..........but kindly consider my prospect also............do give me a little more hike .or say a better postion.etc. try to encash this in your favour. this is a good opportunity for you grab it.

to be very honest they will not go to the court since this will not be sustainable before the court of law. as per constitution of india all indian citizens are free to opt their trade and profession. unless you do something illegal (this not illegal to join their competitor within 1 yr) u can join any where of your chioce.

please contact in case you feel any further problem.

From India, Calcutta

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