Non-Compete Clause in Appointment Letters: Is It Valid and How to Implement It?

Hi everybody,

My company is 750 people strong; it's a marine/engineering inspection company. Now, management has requested to add a clause in the appointment letter stating that our employees, upon resigning, cannot join our competitors. Is this clause valid? If yes, could someone please send me a sample of such an appointment letter?

Thanks in advance,
Shraboni

Well, you can put this clause in your appointment letter, but such a clause has no legal validity as it goes against some free trade practices clauses. Still, many companies use such clauses to put psychological pressure on employees. Also, enforcing such a clause is very difficult.

Hi Sharboni,

It is against the fundamental rights guaranteed in the constitution; henceforth, it holds no legal validity.

Regards,
Vikas

Hi,

I am Gayathri, working as an HR executive. What I would personally and officially say is, "See, once an employee exits the company as per the company's norms, we have no right over the same employee to judge his area and site of interest. Hence, implementing such a policy will not work in a fruitful way. While joining, an employee might agree to it. However, as per the law, it is not valid.

Therefore, I don't support or suggest you put forth this clause in the offer letter.