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What is the validity of Non-compete clauses in India?


04-Oct-2023 (In Labour & Service Law)
I've been working with a startup for sometime. Now I have an offer from a competing company (in India) which I'm inclined to accept. I've had a chat with the founder of my current startup, and he is saying I won't be able to join the company as I had signed a non-compete. If I do, legal action will be taken against me. According to this non-compete I won't be able to be employed with or be engaged in any business that is directly competing with the business of the company for a period of 24 months (Is this reasonable?) They have not specified anywhere what businesses are competing businesses of the company. Should I assume they mean any company that has a similar business? I read that in non-compete clauses the distance within which you aren’t allowed to be engaged in a competing business is supposed to be mentioned. This is not there in the clause of my current employer. They haven’t specified the limits anywhere - whether its within India or within the city/district or anywhere.
Answers (1)

Answer #1
807 votes
Hi,

As per your query, i would like to submit that the above non-compete clause has been discussed in number of judgment in light of section 27 of indian contract act and Article 21 of constitution. After compilation of number of judgements the same has to be tested on some guidelines i. e. Public policy, reasonable, time limit, distance etc. After perusing the documents one can lay down you correct suggestion.

Regards

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