Facing Legal Action for Joining a Competitor: What Should I Do Next?

Dear HR Members,

I am in a strange situation as I am working with a France-based MNC. I resigned recently, and upon my resignation, they asked me to sign a document stating, "you cannot join any competitive or same nature business organization." When I tried to defend myself, they denied giving me a release letter. Therefore, I had to sign it as my joining date with the new company was the next day. I felt I had no other choice.

The company I have now joined is a direct competitor, but in this industry, there are only a few companies that deal in the same product.

Now, my previous organization is taking legal action against me and has sent a legal notice.

Clarifications Needed

There are a few things I need to clarify:

1. My offer letter does not contain such a clause; however, there is a confidentiality clause which I believe is common.

2. When I resigned, HR did not inform me of any such policy they were enforcing.

3. Due to the limited number of companies in this sector, it is common for employees to shift between them for growth opportunities.

4. I had a very good performance record during my tenure at the previous organization.

5. Many employees in the past have left and joined competitive organizations without being asked to sign any such document.

Please advise on what steps I should take. Should I be concerned about anything?

Thank you in advance for your suggestions.

Let me first tell you that you are possibly safe in leaving the organization; however, if your previous employer has gone to court, you will have to respond, and you should.

1. Common or uncommon, you must ensure that you adhere to the confidentiality clause. Be sure that you do not divulge any details (confidential is a very subjective term) of your previous employer to your new employer to earn brownie points.

2. No intimation from HR at the time of resignation should work in your favor in court.

3. This point is valid. Since you are specialized in this trade, you will logically get a job in the same natured business. Normally, courts take due cognizance of this fact.

4. Should work in your favor if you go to court. Probably, this is the reason why your present employer is miffed to this extent.

5. There could be various reasons for that. They may not be privy to confidential information, but you may be. They might not have received the same training about the product, but you might have.

The company may also want to set an example so that other employees think twice before leaving.

You should be responding to their legal notice. Companies are in a stronger position when they give specialized training and are not able to recover training costs because of employees' exit. They are also in a stronger position when they can prove that "you joining a rival organization will amount to a restraint of trade." However, it is easier said than done.

If you can prove that you have not divulged any confidential information and your outgoing will not amount to a restraint of trade for your previous employer, you should be safe. Always keep in mind that Indian labor law favors employees, and employees always have an upper hand.

But before you take legal recourse, there is no harm in asking HR for leniency by explaining that it is nothing but a gradual shift and that you value your association with your previous employer.

Regards,

To update, they are holding my full and final amount and giving me excuses that "I have joined a competitor and they will seek approval from the regional head." But I know there is no such policy. I don't have a large amount, but it is my right. I have an email where they mentioned that I will get my full and final amount in 15 days. How can HR do this? They also held one of the former employees' PF amounts, and the head HR is not signing the form for processing.

Please suggest what to do?