Dear SVA2015,
Is there a HR department in your compnay? If yes, the manager cannot directly discuss these points with the employee.
There might be a case that this is just the ego of the manager not to let go the employee, hence he is being difficult. Check if this is the case?
If HR also takes the same stand with your friend, then ask your friend to write a formal letter to HR that as per the clauses mentioned in his appointment letter & subsequent applicable policies, he is not restricted from choosing his own will of next job. In case the existing compnay wants to pursue legally, then it would be unfortunate but he would have to respond accordingly.
Though, he should be ready to sign any non-discolosure agreement with the current employer, if asked by the HR. Ask him to mention this point in his letter as well.
In any case, the professionals have contacts throughout the industry. If your friend is joining to competitor, then surely someone from your company would have influencial contacts there. If he leaves at a bad note, then it may harm his first impression at the next job through bad references. So, ask him to handle this matter professionally & not to take things personally.
Best Regards,
Amod.