Senior Employees Diverted Business During Notice Period: Can I Take Legal Action?

My few senior employees, specifically five employees, resigned together and started their own company. While they were on their notice period, they diverted our company's business to their new company, resulting in losses for us and damaging our reputation in the market.

My questions:

A) Can I take legal action against them? Note that there is no appointment letter in their name and no clause except our company policy.
B) Can I hold their gratuity and demand an explanation for why they did this, considering they had been with the company for more than 17 years?
C) What are the consequences if they later decide to issue a legal notice to the company if their amount is deducted?

Also, as former employees of the company, they possess a great deal of confidential information about the company that cannot be disclosed to anyone.

A very unfortunate turn of events for you. However, the question I am asking myself is why did five employees leave after working with you for 17 years? There could be any number of issues there, including your management style, lack of ability to grow and develop new skills, salary, and the fact that they can do better elsewhere.

Unless each of them signed Non-Disclosure Agreements to cover this situation, I think this is going to be hard. They may well have taken advantage of the probability that there appears to be no legally binding paperwork that prevents them. It sounds to me like you have little hope of "demanding" anything from them.

There is no doubt that what they have done is unethical, and they will bear that stain on their characters for a long time. However, if their new company can provide better, cheaper, and more targeted services to the clients, I doubt they will care much.

Your task now is to rebuild your company and win the clients back with a more superior service.

Hi, I primarily want to inform you that their gratuity cannot be held. Even if you hold the same, they can legally claim it from you by filing a case before the ACL, Labour Department.

As they submitted a proper resignation and served the proper notice period, you cannot hold their full and final settlement as well.

If you obtained a Non-disclosure Agreement from them at the time of their joining, then you may look for some legal remedy. However, you need to prove the loss and how your company's name was tarnished in the market before the competent court, which will be a very time-consuming and lengthy process.

You cannot blame your employees alone as your clients were part of this conspiracy.

In this competitive world, especially after Covid, many clients, regardless of the nature of the business (IT or Manufacturing sector), have learned the art of taking advantage of difficult situations to gain maximum benefits for their business.

You need to restructure your organization with new clients/employees and have proper protocols in place. Ultimately, the quality of your work speaks primarily rather than the commercial aspect.