How Should I Respond to a Non-Solicitation Breach Letter from My Former Employer?

I have recently quit a company and have joined a new organization. However, after a month's time, I received a letter from my previous employer stating that I have breached the Non-Solicitation Clause of my Appointment Letter, citing the details of the clause. They have also advised me to refrain from such actions.

Please advise if I am required to respond to this letter or what the next steps I need to take are.

Regards,
Amit

It would be great if you could elucidate the clause details to determine whether the indictment is worthwhile. Moreover, the basis of your question is weak without any other details such as your organization type, your role, and department, etc.

Also, please let us know your terms of separating from the company and your point of view for any of our seniors to suggest the point precisely.

Thanks!

As Sharmila Das mentioned, please provide more details about the clause being referred to, as this aspect can differ from company to company. In principle, the answer to your query ["...do I have to answer this letter"] is a BIG YES. If not, you risk them taking legal action, which would require you to spend time, effort, and money handling it. This is where some of the additional inputs Sharmila Das mentioned come in.

But, prima facie, I think you DIDN'T do the right thing by joining a competitor, especially when you had a Non-Solicitation Clause in your Offer/Appointment Letter. Please let us know your logic/reason(s) for doing so. I only hope it's NOT a "nothing will happen" sort of thing.

Regards,
TS

The full text of the "Non-Solicitation clause" and other related clauses is not provided here. However, if it were to be an 'omnibus' clause without restrictions like the number of years for joining any of their competitors, what happens if it is breached, what the separation clause says, etc., the same could be contested. We need to study the whole document before a meaningful opinion can be given.

Regards,
Kumar S.

Understanding Non-Solicitation Clauses

A non-solicitation clause in the appointment letter of an employee has little meaning. It is not likely to withstand the scrutiny of courts of law. Any person working in a company is free to join any other company after they leave. Furthermore, while working in the previous company, they meet various people. No one can tell them they must not speak to these people again as it goes against their fundamental rights.

Misuse of trade secrets would be a separate matter. For example, we have non-disclosure agreements with our employees. The only time a non-compete clause applies is if you have sold your business and have been paid not to compete. You should seek the help of your current employer to navigate this situation in a way that the previous employer understands that going to court is a waste of time. Your current employer will support you as it affects their business.

Legal and Ethical Considerations When Joining a Rival Company

Law doesn't prohibit you from joining a rival company in the same industry, and the company won't pursue something that is still debatable, even though there is a contract between you and the company. It will not be unethical if you inform your clients that you have joined a rival company. However, it will be unethical if you are pricing your products lower because of your previous company's pricing knowledge.

Usually, companies take steps to re-quote old tenders. Non-compete clauses are usually seen in business agreements, not in job contracts. Non-solicitation agreements are enforceable, but no company will hassle clients as clients may have to provide testimony in court. Therefore, you can ignore the notice, but I suggest not using copyrighted materials from your previous company to further your tasks, as that would be considered fraud and misuse of company materials.

In continuation of my query, I would like to quote some text from the received letter as below:

“We would like to highlight that in case of joining the above-mentioned organization, you would be breaching your obligations relating to the Non-Solicitation clause of your Appointment Letter.

Clause 9 of Your Appointment Letter Provides:

“Non-solicitation: You shall not at any time during the term of your employment with the company or thereafter, under any circumstances, directly or indirectly solicit the company's and/or any of its subsidiaries and/or affiliates personnel to leave the employment of the company and/or any of its subsidiaries and/or affiliates or apply for employment with any third party or encourage such personnel of the company to take any action or inaction that may adversely impact the performance by the company of its obligations under this letter and/or any other contract, or adversely impact the ability of the company to carry out its normal business activities. You further agree that you shall not engage in soliciting business or allied business that is in any way similar, identical, or competitive with the business, activities, services of the company, or with those customers of the company with whom you had any contact during your employment with the company and for a period of one year after your employment ceases with the company.”

In view of the above, we would like to reiterate that you shall not breach the obligations, including non-solicitation and confidentiality mentioned in your Appointment Letter for a period of one year after your employment ceases with the company.

Please be informed that this letter is without prejudice to any other rights/actions which the company may be entitled to under law.”

I was working at an executive level at my previous employment. Please advise.

Regards,
Amit

I have observed such conditions in many companies where appointment letters are issued to employees. This condition goes against the Constitution of India and is not enforceable as it violates fundamental rights. Therefore, do not worry. You can respond to this issue with the help of your current employer or a legal advocate.

Regards,
kumar.s.

Legal Guidance on Non-Solicitation Clauses

Please read the Supreme Court judgment in the case of Superintendence Co India (P) Ltd vs. Krishna Murgai (AIR 1980 SC 1717), in which the court held that such restraining clauses are against the Indian Contract Act. As such, you can ignore the notices. You can join any firm of your choice, but you should not divulge confidential matters of your previous company.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Thank you for your suggestions and explanations. However, my full and final settlement has not been completed with my previous employer yet. My relieving letter, experience letter, and salary are still pending with them. Could you please advise me on how to proceed with this matter?

Regards,
Amit

I might be replying to this late and hope you have settled the case with your previous organization. Having read through the clause your previous organization sent to you, I doubt they understand it themselves. The interpretation of the clause (quoted below) is that during your employment with the company and after, you cannot ask the employees of that company to leave the company or apply to a third party's organization. Also, you are not to pursue businesses that are similar to the one that your former company is doing until after a period of one year.

So my guess is that your current employment is similar to what you used to do at your former company, and you are likely interacting with the same customers you used to interact with at the old company, and that is why they have sent you that letter.