Dear Esteemed Members, I would like to request all members to provide information about the "No Poach Policy" that many MNCs are adopting these days. Is there any law (IPC, Company Law, or Labour Law) in Indian territory that allows such a practice in India? Today, I filed a complaint against the unethical and discriminatory practice followed by many employers in India. The complaint has been registered with the Registrar of Companies, Ministry of Company/Corporate Affairs, Government of India, and via the Centralized Public Grievance Redress and Monitoring System (CPGRAMS). Is there an official mode for lodging a complaint? Please advise. I am seeking valuable insights on this highly sensitive matter.
Thank you,
G S Anand
From India, Delhi
Acknowledge(0)
Amend(0)
Thank you,
G S Anand
From India, Delhi
Acknowledge(0)Amend(0)
It is very surprising and shocking to see that none of the vintage/senior members in this social forum have responded to my query yet. I believe many of the experts have seen this thread, but no one seems interested in providing any valuable comments on my query. Does this mean that there is no one in this entire forum who is willing to help me with this small query? I am anxiously waiting for valid and logical responses from the Human Resources experts and Labor Law professionals who are following this social platform.
Regards,
G S Anand
From India, Delhi
Acknowledge(0)Amend(0)
Regards,
G S Anand
From India, Delhi
Acknowledge(0)Amend(0)
Employment at Will - I hope everyone is aware of this basic principle/right of an employee. You/we can frame 'n' number of policies on "No Poach" or "No Hire" among companies. You can't restrict someone from choosing a job at will. Employment choice is purely at the individual's will. Some intellectually capable individuals may draft a policy on this, but you can only restrict someone for a limited period by providing substantial evidence, which is a time-consuming and mentally taxing process. Yes, companies can require employees to sign Non-Compete Agreements (NCA) and Non-Solicitation Agreements (NSA).
Companies can have NCAs and NSAs among themselves. In practice, such agreements may be viewed as unethical, as they restrict the rights of individuals granted by the law. Consequently, these agreements are often considered void. I hope this explanation is clear.
I trust that our seniors will provide guidance on this topic.
From India, Hyderabad
Acknowledge(0)Amend(0)
2Companies can have NCAs and NSAs among themselves. In practice, such agreements may be viewed as unethical, as they restrict the rights of individuals granted by the law. Consequently, these agreements are often considered void. I hope this explanation is clear.
I trust that our seniors will provide guidance on this topic.
From India, Hyderabad
Acknowledge(0)Amend(0)
Hi HRMURLI.A, Thanks for your thoughts! I was expecting information about the prevailing law in India (if any) that endorses this unethical practice adopted by many organizations. You mentioned that employment is purely at the individual's will, but my question is why employers are discriminating by implementing such policies. As previously mentioned, I have lodged an official complaint against an MNC with the Ministry of Company Affairs via CPGRAMS and the Registrar of Companies in Delhi. I'm eagerly awaiting expert advice from senior members on this issue and other potential sources of complaints. Anxiously waiting for opinions.
Regards, G S Anand
From India, Delhi
Acknowledge(0)Amend(0)
Regards, G S Anand
From India, Delhi
Acknowledge(0)Amend(0)
Legality of Non-Compete Clauses in Employment Contracts
It is completely illegal as per the Contract Act, Section 27. The Supreme Court has held many times that such a condition is illegal. I am quoting some judgments in this regard. Even if an employee signs such a bond (e.g., "I will not join a competitor within 2 years"), it is not valid.
Gujarat High Court Rulings
Gujarat – Lalbhai Dalpatbhai & Co Vs Chittaranjan Chandulal Pandya, AIR 1996 Guj: Restriction on an employee after termination of employment is not valid. The employee does not have any bargaining power and has to sign on the dotted line.
“9....If it is not going to benefit the employer in any legitimate manner, the court would not injunct the employee from exercising his skill, training, and knowledge merely because the employee has agreed to it.”
Gujarat – Sandhya Organic Chemicals P Ltd Vs United Phosphorous Ltd, AIR 1997 Guj 177: As per the Contract Act, a service covenant beyond the service period is not valid.
“16....The Supreme Court has also ruled that under Section 27 of the Contract Act, a service covenant beyond the termination of the service is void.”
Supreme Court Rulings
Supreme Court – Superintendence Company of India Vs Krishnan Murgai, AIR 1980 SC 1717: Post-service conditions are not valid. Even partial conditions are not valid. Inequality of bargaining power with employees and harsh and oppressive conditions make the contract invalid.
“29....A contract, which has for its object a restraint of trade, is prima facie void....whether the restraint was general or partial, unqualified or qualified, if it was in the nature of a restraint of trade, it was void.
32.....If the agreement puts a restraint even though partial, it was void and therefore, the contract must be treated as one which cannot be enforced.
53....Not an Indian decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment.
58....If the covenant is to operate after the termination of services, or it is too widely worded, the court may refuse to enforce it.
59....There is inequality of bargaining power between the parties, indeed no bargaining may occur because the employee is presented with a standard form of contract to accept or reject...”
Supreme Court – Moti Ram Deka Vs East Frontier Railways, AIR 1964 SC 600: If a contract is not valid as per the Contract Act, the fact that it was signed by the employee is of no avail as decided by a 7-judge constitutional bench.
“31....It is well known that if the contract is void, as for instance, under Section 23 of the Indian Contract Act, the plea that it was executed by the party would be to no avail....”
Supreme Court – Niranjan Shankar Golikari Vs Century Spinning, AIR 1967 SC 1098: A negative covenant in a service agreement is void. A negative covenant after termination of the contract is not valid.
Supreme Court – Percept D Mark (India) Ltd Vs Zaheer Khan, AIR 2006 SC 3426: Any condition after termination of the contract will be invalid.
“55. On the pleading contained in the arbitration petition, there can be no escape from the conclusion that what the appellant sought to enforce was a negative covenant which, according to the appellant, survived the expiry of the agreement. This, the High Court has rightly held, is impermissible as such a clause which is sought to be enforced after the term of the contract is prima facie void under Section 27 of the Contract Act.”
Supreme Court of India: Bank Of India & Ors vs O.P. Swarnakar Etc on 17 December 2002, Bench: H Sema, S Sinha on the topic of VRS:
..... It is difficult to accept the contention raised in the Bar that a contract of employment would not be governed by the Indian Contract Act. A contract of employment is also a subject matter of contract. Unless governed by a statute or statutory rules, the provisions of the Indian Contract Act would be only applicable at the formulation of the contract as also the determination thereof.
From India, Salem
Acknowledge(0)Amend(0)
It is completely illegal as per the Contract Act, Section 27. The Supreme Court has held many times that such a condition is illegal. I am quoting some judgments in this regard. Even if an employee signs such a bond (e.g., "I will not join a competitor within 2 years"), it is not valid.
Gujarat High Court Rulings
Gujarat – Lalbhai Dalpatbhai & Co Vs Chittaranjan Chandulal Pandya, AIR 1996 Guj: Restriction on an employee after termination of employment is not valid. The employee does not have any bargaining power and has to sign on the dotted line.
“9....If it is not going to benefit the employer in any legitimate manner, the court would not injunct the employee from exercising his skill, training, and knowledge merely because the employee has agreed to it.”
Gujarat – Sandhya Organic Chemicals P Ltd Vs United Phosphorous Ltd, AIR 1997 Guj 177: As per the Contract Act, a service covenant beyond the service period is not valid.
“16....The Supreme Court has also ruled that under Section 27 of the Contract Act, a service covenant beyond the termination of the service is void.”
Supreme Court Rulings
Supreme Court – Superintendence Company of India Vs Krishnan Murgai, AIR 1980 SC 1717: Post-service conditions are not valid. Even partial conditions are not valid. Inequality of bargaining power with employees and harsh and oppressive conditions make the contract invalid.
“29....A contract, which has for its object a restraint of trade, is prima facie void....whether the restraint was general or partial, unqualified or qualified, if it was in the nature of a restraint of trade, it was void.
32.....If the agreement puts a restraint even though partial, it was void and therefore, the contract must be treated as one which cannot be enforced.
53....Not an Indian decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment.
58....If the covenant is to operate after the termination of services, or it is too widely worded, the court may refuse to enforce it.
59....There is inequality of bargaining power between the parties, indeed no bargaining may occur because the employee is presented with a standard form of contract to accept or reject...”
Supreme Court – Moti Ram Deka Vs East Frontier Railways, AIR 1964 SC 600: If a contract is not valid as per the Contract Act, the fact that it was signed by the employee is of no avail as decided by a 7-judge constitutional bench.
“31....It is well known that if the contract is void, as for instance, under Section 23 of the Indian Contract Act, the plea that it was executed by the party would be to no avail....”
Supreme Court – Niranjan Shankar Golikari Vs Century Spinning, AIR 1967 SC 1098: A negative covenant in a service agreement is void. A negative covenant after termination of the contract is not valid.
Supreme Court – Percept D Mark (India) Ltd Vs Zaheer Khan, AIR 2006 SC 3426: Any condition after termination of the contract will be invalid.
“55. On the pleading contained in the arbitration petition, there can be no escape from the conclusion that what the appellant sought to enforce was a negative covenant which, according to the appellant, survived the expiry of the agreement. This, the High Court has rightly held, is impermissible as such a clause which is sought to be enforced after the term of the contract is prima facie void under Section 27 of the Contract Act.”
Supreme Court of India: Bank Of India & Ors vs O.P. Swarnakar Etc on 17 December 2002, Bench: H Sema, S Sinha on the topic of VRS:
..... It is difficult to accept the contention raised in the Bar that a contract of employment would not be governed by the Indian Contract Act. A contract of employment is also a subject matter of contract. Unless governed by a statute or statutory rules, the provisions of the Indian Contract Act would be only applicable at the formulation of the contract as also the determination thereof.
From India, Salem
Acknowledge(0)Amend(0)
Thanks Sas and Pvenu for your valuable thoughts on my query.. I really appreciate this..!! If any other member wants to throw some light on this sensitive issue, please do . Regards, G S Anand
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
No poaching is possible between one company and another company. The law allows it. However, such a condition cannot be enforced on an employee. An employee can work anywhere he wants, as guaranteed by Article 19(1)(g) of the constitution which states, "Practice any profession he wants."
From India, Salem
Acknowledge(0)Amend(0)
From India, Salem
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
TAMIMI LAbor LAw.pdf