Are non-compete clauses valid?
Non-compete clauses, which restrict employees from working for competitors after leaving their current job, are generally deemed unenforceable in India. According to Prof. Paramjeet Singh, Associate Professor of Practice at BITS Law School, such clauses conflict with the "right to livelihood" protected under Section 27 of the Indian Contract Act. The Supreme Court, in the 2006 case Percept D Mark (India) Pvt. Ltd. v. Zaheer Khan, reaffirmed that post-employment non-compete agreements are not enforceable in India.
Assistant Professor Sweta Sinha of IMI Kolkata elaborated that under the Indian Contract Act, 1872, agreements restraining trade, like non-compete clauses, are void except in rare circumstances. Although courts may grant injunctions against employees who disclose confidential information, solicit clients, or breach confidentiality obligations, they are reluctant to enforce entire non-compete clauses that prevent job opportunities.
Some employers include a 'garden leave' clause, allowing employees to receive pay during their notice period while prohibiting them from taking another job. Nonetheless, other terms like 'confidentiality' or 'non-solicitation' may survive termination and be enforceable, but broad non-compete clauses remain unenforceable in Indian courts.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
