Smart companies would not have such clauses. In fact, what we have done is different. While statutory gratuity of half a month is provided for, we have created our own gratuity which is in addition to the statutory gratuity. As per this scheme. Every employee who has completed 5 years of service would be entitled for one month's last drawn when he leaves the company. And this is subject to a maximum ceiling of 12 months last drawn salary. But we have a rider. If the employee resigns, then there is a waiting period of 6 months to claim this benefit. And this company gratuity will be paid only to those who do not join the competition. The company's definition of competition would be final as to who is competition.
What this has resulted in is the fact that key middle and senior people do not get lured by the competition, because they have to compensate the employee this loss of gratuity.
We do not force any one not to join the competition. Choice is theirs. If they don't join the competition for atleast 6 months, they get their non statutory gratuity. Our manpower turnover of those who have completed 5 years service has crashed to 3% from a whopping 21%. HR is able to focus more on OD and employee related work rather than recruitment.
Just thought that I must share this. Companies can do things in a positive manner rather than harassing an employee and losing the goodwill of the resigned employee and also the message will spread to prospective employees.