I wanted to know about the Enforceability Of ‘Non-Compete Clause’ Under An Employment Agreement for Maharashtra /India Region? If I want to get signed non-compete agreement from new joiners generally, the non-compete agreement states that the employee may not work for a competing firm for six months to two years once they leave the company. or they need to pay 2 years salary as a pentalty. Please advise if employer can do that. Also share the template if you have one. Thanks in advance !
A Non-Compete Clause under an employment agreement is very well valid in any part of India, provided it is reasonably drafted. Now, the term ‘reasonable’ is quite wide and abstract. Based on the nature of employment, the business of the employer, the non-compete clause can restrict the employee from getting to similar employment for a ‘reasonably limited period’ and in case of violation again the employer can stipulate a ‘reasonable amount’ as compensation. It differs from case to case and there is no specific slab to it.
The general industry practice is 6 months to 2 years and is reasonable. There are innumerable litigations and case laws related to this aspect.