Is My Non-Compete Agreement After Forced Resignation Legally Enforceable?

Non-Compete Agreement and Employment Termination Concerns

I worked for more than six years, and at the time of joining, there was no such agreement. The employer did not provide any training, etc. I had about 27 years of experience before joining the company. I started the manufacturing company from scratch, and the owner utilized my expertise, which I gained in the profession.

Six months ago, the employer asked me to leave, but I had to write the resignation and sign a non-compete agreement for a duration of 5 years; otherwise, the employer was not ready to settle my dues, such as salary, gratuity, leave encashment, etc. In the settlement papers, he used the term "Notice pay." Is it sufficient to justify termination? If I have resigned, why is the employer paying notice pay?

I have no other source of income except my salary. Is this non-compete agreement legally enforceable if I work in a similar profession where no compensation will be given by the protected party? It means I cannot earn in the future from the profession in which I have been serving for the last 33 years.

Legality of Non-Compete Agreements in Employment

Negative covenants and undertakings taken from an employee, stating that they will not join a competitor company for a specific period, are illegal and will not be binding on the employee. Once you have received the settlement amounts, disregard any notice pay issues within it. You are now free to join any company of your choice, including a competitor of your previous company. Your previous employer cannot take legal action against you. They may send letters, including those through advocates, but it is advised not to respond.

You can simply refer to the judgment in "Sandhya Organic Chemicals v. United Phosphorous," which states that an employee cannot be restricted from using the knowledge and experience gained during employment. Any agreement preventing an employee from working with a competitor is considered void under Section 27 of the Indian Contract Act. The Supreme Court has also declared that a service covenant extending beyond termination is invalid.

Regards, Madhu.T.K