I am working in an IT services company based out in Mumbai. Their employees are leaving one by one and joining our direct competitors. How to deal with it? we don't have their signed non-compete agreement also, however, we have started now but those who have left are asking for fnf and relieving letter. What should we reply to them? They are threatening to go to court.
From India, Gurgaon
Dear Swati K,

Retention of the employees, whether the company is small or big, is always a challenge. However, Delhi high court has ruled that obtaining a non-compete agreement is illegal. You may click here to refer to a past thread I had posted a few years ago.

However, the problem that you are facing is being faced by almost all the micro and small enterprises. With great difficulty, they employ someone, and after a while a big fish from the same industry gulps them. Occasionally, the owners of micro and small enterprises rue over having reduced their company to a training centre for the big companies.

So what is the solution? The solution is to drive the business in spite of this inherent challenge. Nevertheless, you can make the service condition attractive by:

a) Creating a healthy interpersonal environment in the company.
b) Creating a culture of empowerment.
c) Measure the performance scientifically and reward for the performance.
d) The employer must demonstrate strong technical competence. The employees should feel privileged for getting a chance to work under such a person.


Dinesh Divekar

From India, Bangalore
Best and next best is the key.
If you are the best company for an emloyees than they must know what will be the next best for them kept by the company. Competitons will be there and employees may leave. Think on what can retain them. ThinK of employee engagement Initiatives & prcatices.
Remember that trust and loyalty of employees can be won only with trust and loyalty .

From India, Vadodara
Dear Swati K,

The most significant work of the HR Department is to retain its employee. The retention of the employees, includes lucrative package, conducive working environment and employee welfare. You need to understand why your people are leaving on by one to your competitors company. You have to choke the hole first, which remains the sole flow of your employee.
You can put some clauses on notice pay, You can take bond of loss owing to noncompliance of work, adopt retention of wages, extend welfare facilities and try to give best package.

The claim of Full & Final is one's right that cant be denied. You need to pay those who have resigned and left after serving notice period and issue them relive letter. Sent them the absconding notice, those who have not resigned officially or have not served notice period and claim of loss for not complied the allotted task. You should discuss the issue legally and every thing stand fair with ornaments.

From India, Mumbai
Dear Colleague,
Non- Compete Disclosure : Challenges

Very good discussion and very important point which HR has to handle very tactfully.

The Business will give pressure to HR to handle such case as the talents directly go and join with competitors and that further pulls business down.

It is a tough situation for HR Professionals to satisfy the Business Leaders one side and Talents on the other side in-between the path of Legal systems prevailing.

The Non-Complete agreements as replied by our Colleagues will not be seen good before yes of Law. Best Retention is the main strategy here and we also know how difficult it is still for all of us to retain. This happens everywhere.

There are few way forward in this complexity:

1. Talents who had already left:

As far as F&F is concerned, it is not correct to hold any F&F but to settle to the talents left with a letter stating that he / she shall not disclose any of the company confidential business data in an advisory tone and if any violations noticed, that will be dealt with appropriately. This may not help much legally but morally we will communicate to such talents that it is not fair on their part to share any company details. Also ensure that all the Digital data are collected back / erased from the talents before F&F is cone.

2. For Existing and New Talents who will join in future:

Even though, Courts viewed it one sided and not in favour of such things, it is suggested

a) At the time of hiring process itself share and get agreement of Non-Compete Agreement and if the talent is selected, while on-boarding, the agreement is to be executed aside agreeing and signing Appointment Order terms. This will make Company's communication clear. ( Have a legally well drafted non-compete agreement in-place obtained from a reputed Advocate)

b) Please exclude such non-compete clause in the appointment order terms as always the Courts view that the job seeker is in a weaker stand-point and the employer can not arm-twist the weaker bargainer. However, have a separate non-compete agreement as per above para of this writeup mentioning that there may be civil breach if the Talent leaves the company and joins with competitor directly. Probably, only a civil suit may be initiated in such case of breach, but from the employer's perspective, this will create a sort of moral binding (even though, there is less support from legal angle to execute such an agreement)

c) From the employee's point of view, he will feel that he has fundamental right to join in any employment with any employer of his choice and no one has right to interfere with such of his rights. But as the Company is making the communication clear at the point prior to hiring, during hiring and also executes a fair agreement, at least, employee will have moral biding and employer if he desires can go for civil proceeding. However such Civil Legal action might affect the organization's reputation in the minds of future employable candidates and the company may loose the status of " Preferred Employer" (and attracting good talents may be a challenge in near future.

Hence to put it in nutshell:

1. Not to hold any F&F but to settle with an Official letter with clear communication as stated in Para 1

2. Have communication clear about non-compete disclosure agreement from the very initial state of hiring process

3. Keep appointment order and Non-Complete clause separate documentation and singed by both sides

4. Collect back / delete / retrieve all data to the possible extent from the talent before F&F ( Have possible controls from IT angle to prevent / trace that prior to putting down paper, any bulk data, business data as shared to his personal id or to any external source- Challenging but worth to do)

5. Use this only for moral biding and not to handle any employee on his leaving harsh

6. Make the retention process /strategies stronger and stronger

7. Try to bring clauses like Performance Bonus or Incentive in the Appointment Order and defer the disbursement to a longer span of time ( say has to gain eligibility in the current financial year subject to fulfillment pre-fixed KPIs; however the said incentive will be disbursed in the subsequent financial year provided he/she is not joining with competitor etc

This may help to a great extent.

Thanks to other colleagues who had given very valuable throughs in this subject matter in their discussion and kindly read this along with their insights

All the Best and God Bless,
Tamil Nadu

From India, Chennai
Dear Swati,

Even if no such conditions are stipulated in their appointment letter, if model standing orders apply upon your establishment, then you may take recourse to the standing orders and can deduct notice pay from the F&F amount. Howeever, you cannot force any employee to work in notice period or restrain him/her to work after their leaving your employment.

- S. K. Mittal

From India, Faridabad

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