Feeling Stuck After Signing a Non-Compete: How Can I Move Forward in My Career?

I have been working in an organization for the past 10 years and have now resigned. At the time of resignation, I was asked to sign a declaration on a stamp paper without which I can't hand over my responsibilities. I did so without considering any of its consequences. The declaration states that I should not join any similar services for a few years and should not engage in any similar activities.

Having worked for many years in a similar field, it has become challenging to find work that is different from my previous role. I am in a dilemma and unable to accept job offers that are similar to my past experience. Some opportunities have arisen where I could work as a consultant, but I am hesitant to take them up. This situation is greatly affecting me.

Could someone shed light on this matter? I would greatly appreciate any assistance.

Best regards,
A. Sagar

Dear Sagar,

Do not worry and chill out. Take any job you want, but make sure to do so only after obtaining a relieving letter. Please refer to Section 27 of the Contract Act, where it is written, "Every agreement by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void."

Now, the said declaration becomes void, and no one can restrain you from joining a competitor. If you have time, you can read the attachment.

No need to worry. You can just ignore the agreement like that. No one can stop the growth of an individual by using such an agreement. One thing you can do is work in the same kind of industry in which you worked before, but you should not disclose the trade secret of your previous company to the present employer.

Many companies include these clauses in their service agreements, offer letters, relieving letters, etc. Ideally, such a clause hampers an individual's right to work at a place of their choosing, so it can't be fully questioned. The main reason for including such a clause is that when a company trains you in a specific skill set, they do not want you to utilize their efforts at a competitor's place. Rarely do we see cases like this unless the two companies (your former and current employers) have signed a no-poach agreement. Even in that scenario, it becomes a headache for both employers.

Usually, companies do inform employees about who their clients are, and typically, this list also includes the employers you cannot work with thereafter. I am unsure of the impacts that occur, but ideally, it shouldn't be very serious.

"I was asked to sign a declaration on a stamp paper without which I can't hand over my charges. I did the same without guessing any of its consequences."

Understanding the Importance of Reviewing Documents Before Signing

First thing is, never sign without understanding the full meaning of what is being put in front of you for signature.

Post-Signing Actions

Now, having signed—please tell how many years do they want you out of the particular field of your expertise? What is the exact wording of your "declaration"? As far as I am aware, such agreements have no real value as no one can restrain you from practicing your trade or vocation. You, of course, have to respect the trade and professional secrets of your former company. That is all about it.

Position and Restrictions

What position were you holding that they do not want you to work/join another company in the same field?

Legal Framework and Your Rights

Article 19 I G of our honoured and respected Constitution reads as follows: "All the citizens shall have the right to practice any profession, or to carry on any occupation, trade or business." However, the right to carry on a profession, trade, or business is not unqualified. It can be restricted and regulated by the authority of law. The restrictions have to be reasonable and in public interest. Moreover, it is important to understand that fundamental rights are available only against the state or, in other words, government or government undertakings.

Section 27 of the Indian Contract Act

Section 27 of the Indian Contract Act makes void all contracts that impose 'restraint of trade'. The provision is as follows: "Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void."

Additional Resources

Reading of the Competition Act 2002 may be helpful. Some case laws: Superintendence Company of India Pvt Limited Vs. Krishnan Murgai, Desiccant Rotors International Pvt. Ltd. Vs. Respondent: Bappaditya Sarkar and Anr.3.

Steps to Take

Obtain your F and F, and other documents by personally visiting, putting your demands in writing. As a last resort, think of going to statutory authorities for gratuity and legal notice for other documents and payments due. After that, go ahead and work where you wish, but confidentiality of your knowledge about the previous employer, processes, products need to be strictly honoured.

Consulting a Legal Advisor

Finally, consult your legal advisor who will tell you what is to be done after discussing with you and seeing papers. Our discussion is only general in nature and a kind of guideline/outline of possible actions.

Thank you so much for your suggestions. I do understand now that I shouldn't have signed this kind of document, but I was under pressure to close my accounts with that organization, so I made a hasty decision. Additionally, the HR person was able to softly convince me to sign.

In the document, they mentioned that I should not join or engage in any similar business for 3 years from the date of relieving. I have not disclosed any trade details or secrets of this company to anyone thus far. I have a lot of respect for the organization I worked for so long. However, they are currently holding my relieving letter and settlements, which is making it difficult for me to fully move on.

I am considering taking up some consultancy work with business units similar to theirs and potentially starting something related to my field. I sought legal advice on this matter, and they provided similar feedback, suggesting that I could send a notice and escalate the issue. I am a bit concerned that individuals who are wealthy and powerful might cause me trouble if I pursue this path. This is my main concern. Please advise.

Regards,
Sagar