Read this blog to better understand the non-complete clause after the termination affect your legal rights.
According to the Contractual Laws, a non-compete clause is a provision in an employment agreement that requires an employee to make an undertaking and give his acknowledgment to the condition of the employer that the employee will not be a competitor of the employer in the form and essence of the employment of the employer either while the employee is employed by the employer or even after the employee has left the services of the employer. The employee makes this acceptance when the employee signs the employment agreement.
Indian Contract Act, Section 27 (from 1872), Clause 27
Under the Law of Contracts in India, non-compete clauses are deemed illegal and, therefore, cannot be included in business agreements. According to the Indian Contract Act of 1872, Section 27, “Every agreement by which anybody is restrained from exercising a lawful vocation or trade or industry of any kind, is to that extent void,” any contract that prevents someone from legally engaging in a profession, trade, or business of any kind is invalid.
Because section 27 of the Indian Contract Act-1872 makes it illegal to restrain trade, Indian courts have consistently rejected the application of post-termination non-compete Clauses in employment contracts. These clauses have also been held to be invalid and against public policy because they have the potential to deprive an individual of their fundamental right to earn a living.
For an agreement to be considered a “restraint of trade,” which is a prerequisite for any restrictive covenant, to fall under the purview of Section 27 of the Contract Act.
Unlike the law in the United Kingdom, the Contract Act does not differentiate between partial and total restraint of trade. As a result, if the stipulation constitutes restraint post-termination of the agreement, then the clause and the deal are void. You have to be aware about NDA Contract Online Process for business.
The qualification that only reasonable restraints are valid and enforceable has been read into Section 27 by the courts. Section 27 does not offer insight into what kinds of restraints are correct; however, the courts have read this qualification into Section 27.
What Does The Constitution of India Say About This In Article 19(g)?
Every Indian citizen has the right, as guaranteed by Article 19(g) of the Constitution of India, to engage in any profession, trade, or business they choose.
The courts have always been wary of preserving such restrictions and have kept the viewpoint of this provision flexible to ensure that the principles of justice, morality, and fairness are appropriately applied, depending on the facts and circumstances of each case. Since this is not an absolute right and sensible restrictions can be positioned on this right in the interest of the public, the court system has always been wary of upholding such limits.
The judiciary is leaning more towards giving some regard to Non-compete agreements in light of the required confidentiality and the integrity of the employment. This is because of the considerations brought up in the previous sentence.
In addition to these judgments, there are several other reviews that various high courts have handed down. These judgments have outlined specific guidelines or tests that can be used to determine whether or not the imposition of restrictions on such non-competing agreements is valid and within the law. It demonstrates that Indian courts have the authority, under certain conditions, to enforce confidentiality agreements designed to safeguard an employer’s proprietary rights.
What Repercussions for Breaching the Terms of a Non-compete Agreement?
If you violate the terms of a non-compete agreement, you put yourself in danger of several consequences, including possible legal action; however, it is also possible that no products will arise as a result of your actions. Non-compete agreements are highly contentious in modern times and are generally frowned upon by the legal systems of most states in the United States.
Consequences of Breaking the Terms of a Non-compete Agreement:-
You risk being required to make a financial settlement with your previous employer. This is the short and simple answer.
Additionally, your previous employer may take legal action against your present employer if they believe you have violated the non-compete agreement by working for a competitor.
However, there is also the possibility that you will not face any consequences for violating a non-compete agreement because your employer does not intend to enforce the contract or pursue legal action against you or the company you will be working for in the future.
Even more, there is a possibility that you will not suffer any repercussions for violating a quasi-agreement because the agreement isn’t even binding, to begin with, and this further increases the likelihood that you will not face any consequences for breaking the agreement.
If you do not have any training in the law, all of this may sound alarming to you; therefore, you must get in touch with an experienced attorney before entering into a non-compete contract or as soon as you believe you may be made subject to one.
Suppose you violate a non-compete agreement that is valid and enforceable under the laws of your state. In that case, the employer who is a party to the non-compete agreement will likely file either a lawsuit for money damages against you based on any actual losses suffered by your employer or a lawsuit against oneself seeking to enforce the non-compete accord by getting an injunction against you.
A request is an order from a trial directing you to refrain from violating the non-compete agreement. In general, if In addition, the employer has the legal right to sue you in court, seeking monetary damages and an injunction against you. However, the court will only order that you are prohibited from working for a competitor for the duration of the clause in highly unusual circumstances.
In addition, if you violate a non-compete agreement that is both legal and enforceable, the employer who is a party to the non-compete contract has the right, under the law of the state where the violation occurred, to file a lawsuit against your new employer for tortious interference with contract or biz relations. In this scenario, one new employer will likely terminate your contract of employment to cut down on the costs of potential legal action.
On the other hand, the potential repercussions that were outlined earlier will only take effect if the employer and the employee have initially entered into a legally binding non-compete agreement. Employers frequently draft non-compete agreements that include anything and everything that can be conceived of in it to prevent you from engaging in any form of possible competitive behavior.
This occurs quite frequently. However, due to their unreasonable and overly broad non-compete agreements, these employers have no protection from the employees’ potential to compete with them in the marketplace, so they are in a worse position than before.
Consequently, a non-compete agreement might not be enforceable from the beginning and might not apply to you. Lastly, just like any other type of contract, a non-compete agreement is only enforceable if you are given something in return for signing it and are not forced to do so. If any of these challenges are valid, the court will most likely refuse to enforce its terms.
Conclusion:-
You should find a seasoned attorney as soon as possible because the possible repercussions for violating a non-compete agreement can be severe and can cost you a lot of money and even your job. Because of this, you should act quickly to hire an attorney. You can get in touch with the legal experts of Vakilsearch for help in this matter.
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