How Can I Recover Unpaid Dues from My Former Employer After Refusing a Non-Compete Clause?

Hi All, I worked for almost 15 years with an Indian company having offices outside India as well. It was my first company, and I joined as a GET. With my hard work and extraordinary performance, I was able to climb the career ladder in this company and enjoyed a very good reputation with both the company and customers.

Leaving the Company

After working for many years, in September 2015, I decided to leave this company due to some family reasons (treatment needs for my special child) and submitted my resignation to the company. I had accrued a significant leave balance due to my years of service, and my Superior and HR promised that it would be adjusted with my notice period. My senior forwarded my resignation to HR, mentioning my last date in the company.

Non-Disclosure Agreement Issue

On the last day, after completing my separation formalities and handing over all company materials, when I approached the HR personnel, they presented me with a Non-Disclosure Agreement (NDA) that included a Non-Compete clause. The clause stated that I could not join any competition of the company for 2 years, even though the company had multiple business lines and I was only working in one of them. It also prohibited me from joining any of the current or prospective customers of the company.

Given that I was shown this document on the last day, at the end of office hours, and did not agree with the clauses, I declined to sign it. I was then informed that if I refused to sign, my settlement would not be processed, and I would not receive my relieving letter (which incidentally also contained these clauses), experience letter, or clear dues. This situation felt like being pressured to sign a bond on the last day, although the appointment letter (15 years old) still contained similar clauses.

Joining a New Company

Since I needed to join another multinational company immediately (a competitor to the first company) and they accepted the email from my superior to HR as proof of my relieving, I was able to join without signing the NDA.

Pending Dues and Attempts for Settlement

I then attempted to contact the company's HR personnel via phone and email, requesting my full and final settlement, including my last month's salary, PF, gratuity, and other expenses like the payable annual bonus/gratuity. Additionally, the company had an employee cooperative society, and I had shares worth approximately INR 25,000 that were also unpaid. Moreover, my expense claims for international marketing, amounting to around INR 50,000, were not reimbursed.

Experience with Another Company

After working at the second company for around 6 months, I joined another company where all my dues were paid, and I received a commendable relieving letter. This contrast highlighted the differences between a professional multinational company and the first Indian company where I dedicated 15 years of passionate service.

Seeking Guidance

Now, after approximately 1.5 years, there are still pending dues, and I am seeking guidance on the steps to recover them. I am unsure about the status of my PF and gratuity. As per my understanding, they cannot legally withhold these payments. Please advise on how to proceed in this matter.

Companies prohibit employees from joining their competitors after leaving their company. This issue has been previously discussed in this forum. Nonetheless, you may find the following link helpful: [Freedom of contract must yield to freedom of occupation | Business Line](http://www.thehindubusinessline.com/todays-paper/tp-opinion/freedom-of-contract-must-yield-to-freedom-of-occupation/article1661021.ece).

Furthermore, I have attached a court judgment for your reference. Please review it.

Thanks,
Dinesh Divekar

I am sure Mr. Dinesh's reference to a similar situation or case law is amply clear to the querist with respect to his solution. I think it's high time he should move the matter of non-settlement legally. The EPF & Gratuity Act, if applicable to him, answers the interest claim when the settlement is delayed beyond one month. Therefore, nothing is lost. However, we are saddened to see how badly the employer could mistreat a person who contributed significantly for the employer's sake. It is pathetic to read about the ill-treatment meted out to a very senior employee. I don't agree that it could only happen in an Indian company or the private sector. There are plenty of such cases everywhere. We cannot generalize and brand all Indian companies like this. We had read a post in the forum by a learned member who narrated how much they take care of their employees and how hard they try to retain them. That aside, my wish is that he should get all his full and final settlement with due interest up to date, and he shouldn't be demotivated by such a rare experience. He can thrive really well backed by his long experience gained so far.

Legal Validity of Non-Compete Clauses

First, any agreement to disallow you from joining a competitor company is illegal and does not have any legal validity, even if you have not actually signed such an agreement. According to court decisions, an employer cannot restrict you from joining a competitor company after you resign. Therefore, once you resign, you are technically free to join the competitor company the very next day.

Full and Final Settlement

Secondly, calculate your full and final settlement. Submit a written demand to the company with proper acknowledgment. For gratuity, promptly submit Form I. The company may not have much control over your Provident Fund (PF), but you can reach out to the PF authority if needed.

Please be aware that depending on the classification of your full and final settlement, you must make demands before the appropriate authority. For example, demands for salary and gratuity cannot be made before the same statutory authority.

Dear friend,

Please hand over, acknowledge receipt, and submit all your claim forms in the format prescribed in the Act/Rules without delay (if not already done) and await their response. After 15 days, you should pursue it assertively, seeking assistance from an advocate if necessary.

Dear All, After sending the reminders, I received the following reply:

"This refers to your below-captioned mail regarding the settlement of your dues, which is subject to the following: Our Company has filed a suit for permanent injunction and damages in the Court of Hon’ble Civil Judge Senior Division against you for the breach of terms of employment. We are releasing these payments without prejudice to the suit and other rights and remedies available to Our Company under law, equity, or otherwise. Please revert."

Please let me know what action I should take. The situation described above holds true, and I believe I cannot be considered in breach of the terms of employment by joining a competitor. I have not received any notice from them, and I am unsure how to verify if this is true.

It is time to contact a lawyer rather than look for online suggestions. The matter seems to be getting complicated, and your company is in no mood to let you go that easily as well.

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Dear Mr. Anamika, you have not explicitly stated whether your dues have been paid or not. Did you leave the company in September 2015? After carefully reviewing your latest post, it seems that "Our company has filed a suit for permanent injunction and damages in the court of the Hon'ble Civil Judge Senior Division, which place?" against you for breach of employment terms. Please collect the suit number by reply mail. If the company fails to provide the suit number, it will be deemed that they are merely threatening you with such statements. Stop worrying and start thinking.

Notice Period Salary Adjustment Issues

Furthermore, this company deducts the gross salary for adjusting the notice period from the employee but pays only the basic salary when the company has to pay the employee. Is there any rule for this? Can we force them to adjust the leaves for the notice period?

In my case, I have served 1 month of notice from the 3-month notice period and was told that the remaining 2 months of notice would be adjusted with my credited leaves. However, at the time of sharing the Full & Final (F&F) settlement, they deducted the 2 months' gross salary and credited only the basic salary for the leaves balance. This has resulted in a loss for me. Is there any law for this?