Legal Action - employee diverting our business contracts to his company

Recently we came to know that one of our employees started his own organization (infra Company) in the similar industry and appointed as a Director and has been diverting our business contracts to his company which was proved by us. Finally we made him to resign and took a letter from him stating that he has been appointed as a Director for xxx company with DIN number details and asked him to leave. Now My Management wants to take 3 months salary from him or proceed for a legal action on the above employee. In the above incident can we go for a legal proceedings with him.
I would request you to kindly advice me.....

If its mentioned in his appointment letter that he should Not work or take up any other employment while in service with you .Then you can take legal action against him with reference to the appointment letter .
At the same time you should have evidences that he is/was working some where else while in service with you. You can take legal action against him as his working else where has resulted in loss to your company .He has violated the clause in the appointment letter which he had signed and accepted .

In addition to above; please ensure whether he is a whole-time director or a part-time director ?
In case of the latter, whether your terms of agreement cover it ?
Best option however, would be to sort out the matter amicably as a good relationship may turn out to be of use later.
Warm regards.

Dear Rajeev ji,
I would like to ask you if there is no such clause in an appointment letter or there is no appointment letter is issued to the employee, in such case what should be done?

Hello Venkat,

Like Rajeev Dixit mentioned, does the Appointment Letter cover this aspect?

Also, do you have a Non-Compete Agreement for this position/employee in-place?

Now coming to the Plan-of-Action, I think I will be @ variance with Raj Kumar's suggestion this time.

Had this employee only joined another job while still serving your company, then 'amicable settlement' COULD be one viable option. But in this case, this employee went far from that step. A lot depends on the 'type' & 'extent' of damage he caused to your company--deeming that damage was indeed done.

And another important aspect--what is the reading of your management regarding the timeframe of the damage caused--meaning is the damage limited to the CURRENT set of contracts or does/could it extend to any future ones too? Given that you are into Infra sector, the chances of long-term damage is high, since Infra contracts take a long time to materialize [from start-to-finish]. If such situation is thought realistic, then suggest go legal without hesitation. You mentioned you also have his DIN details--that should suffice to put this guy in the dock. And this is 'irrespective' of whether the Appointment Letter has the relevant clauses OR NOT--can be pursued independently.

This also brings to the fore the culpability of the company where he is the Director now. If you have sufficient proofs/evidence, then you can as well bring the other directors & the company too into the scene legally--in a way to cover your positions in the contracts under scrutiny.

To some extent, this COULD get covered under Industrial espionage clauses--meaning criminal intent--your advocate would be better placed to suggest these aspects.

So, in a nutshell, this IS NOT just a case of an employee working elsewhere but also to do with company confidentiality & business espionage.

All the Best.

Rgds,

TS

Advertise in the newspapers with his photo stating that xyz, designation was an employee of our organization has left our organization since dd/mm/yyyy. He no longer represents this organization and anybody dealing with him will be doing so at his sole risk and responsibility. Next step will be to tighten the employee onboarding process in your organization and review the employment terms and conditions - recast / fine tune them based on this experience. Since you say, he has given his resignation letter, the only thing that you may now do is to withold his notice period salary.

Dear Rajeev ji,
I would like to ask you if there is no such clause in an appointment letter or there is no appointment letter is issued to the employee, in such case what should be done?
sachin kumar sharma
advocate

Although the views expressed by Mr Hansdah and Mr Tajsateesh are to tally different , I can not help but agree with both of them ! Both suggestions are worth exploring.Say if the person has good contacts , a good PR , then why not think of making him a franchisee to expand your business further ? It may lead to a win-win situation.For that an effort to sort out things amicably may work in your favour.However if his attitude is ' do whatever you want, I am least bothered ' type then be strict and fight it out just as Mr Tajsateesh has suggested.All the best !
S.K.LIMAYE/MBA