Navigating NDA and Non-Compete Clauses: What Happens After Leaving a Job in India?

Hi All, I was working with a small IT company for the past 2 years and 3 months. I resigned from my employment, and my employer accepted my resignation. I have completed all exit formalities as per the company policies.

During the joining process, the employer asked me to sign an NDA and Non-Compete agreement. I signed the agreement, but I do not remember its contents as I do not have a copy of it.

In my relieving letter, my employer mentioned the NDA and Non-Compete Clause, stating: "The terms and conditions listed in the Non-Disclosure, Non-Compete, and Confidentiality documents signed by you when you joined the company will still be in effect after you have been relieved, and we suggest that you review, honor, and conform to the conditions stipulated in those document(s)."

Queries Regarding NDA and Non-Compete Agreements

Please review the queries below and provide advice:

1) Are NDA and Non-Compete agreements legal in India?

2) Will the NDA and Non-Compete agreements still be in effect after I have been relieved from my employer?

3) Is this relieving letter valid to submit to a new employer?

4) Will my new employer accept this relieving letter?

Thanks,

Negative covenants such as non-compete and non-disclosure tied up with positive covenants of an employment contract are enforceable only during the subsistence of the contract and not beyond its term unless they are unconscionable or wholly one-sided.

Yet, such contracts are made by some employers as a measure of restraint or deterrent to protect their proprietary interests when the particular employee is, by virtue of their position or the nature of work in the organization, privy to various confidential and proprietary pieces of information of the establishment.

Legal Perspective on Non-Disclosure and Non-Compete Agreements

Therefore, in light of the judgment of the Apex Court in Gujarat Bottling Co. Ltd v. Coca Cola Co. [1995 - 5 - SCC - 545] and the judgments of various High Courts in this regard, such contracts would be void if (1) they are beyond the period of the contract, (2) restrict the employee's right to employment post-termination of the contract by efflux of time and compel them to idle, (3) contain unconscionable or excessive or one-sided terms, (4) unless they are in respect of a fixed-term contract employee, that too during the remaining unserved period of the contract, and (5) the contract of employment is terminated by the employer.

Therefore, my opinion is that your Non-Disclosure and Non-Compete Agreements would not stand in the way of your alternative employment in the future. Cultivate the practice of getting copies of such legal documents.

Regards