With the opening up of Indian Economy there has been a myriad entry of foreign players thereby increasing the job opportunities in all sectors i.e. manufacturing , services etc. The demand for qualified and experienced persons is on the rise with hefty pay packages and lucrative offers. But it is disheartening to see the practices of the companies to hire (solicit) experienced employees as well as the practices to curb the movement of their own employees to other companies. Serious efforts are being made by the employers to devise methods to restrict an employee from leaving the current employer and to somehow prevent him from seeking employment elsewhere and almost all the companies take extra care to draw up elaborate and complicated employment contracts so that a
fear psychosis is put on the minds of the employees from the thought of leaving the employer. Also in the plea of providing "
training", the demand for bank guarantees of heavy sums is an impediment for the employees to look for career growth. The innumerable bonds that the companies sign with their employees are just a way to deter them from leaving the organization.
In this race of restricting employee mobility the companies have vehemently flouted the fundamental right embodied in Article 19(1)(g) of the Constitution of India that allows the citizens the right to practice any profession or carry on any occupation, trade or business subject to reasonable restrictions in public interest. Any amount of arm twisting tactics & fine tuning of employment contract cannot deter the citizens of this country from exercising their right.The most important legal provision which safeguards the rights of the employees is contained in Section 27 of the Indian Contract Act, 1872 which reads as under : -
“27. Agreement in restraint of trade void - Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent
void.
Exception-1 : Saving of agreement is not to carry on business
of which good is sold
Though the reasonableness is decided on a case by case basis but mostly any "negative covenant" in the employment contract cannot curb the freedom of the employee in seeking employment elsewhere after the termination of the contract.
2 comments:
Infact, bonds can be made useful to both the parties than being a one - sided contract where the employer derives the rights from the contract but the same or the similar right is deprived to the other party like "Employment At-Will + Notice period before resignation".
If the bond does not destroy the mutuality of obligation or is not ambiguous in terms of applicability.
Agreements where one party is restained from exercising a lawful profession or trade or business is also void.
I would like to share the document where Reasonable Restraint as a method of determining the validty of the contract is used.. In fact in the same doc the author illustrates ground where where non compete clause is outrightly rejected like in the Madras High Court case - Polaris Software Lab.v/s Suren Khiwadkar (2004)
here
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