Ensuring Electronic Signature Licitness for Non-Compete Agreement in India

How to eSign a document: electronic signature licitness for Non-Compete Agreement in India

i'm vinod and today's conversation we're going to talk about non-complete agreements non-compete agreements have been in the news recently because a bunch of companies are trying to enforce these rules on early career employees and preventing them from joining certain companies so we'll get into the legality of do these non-compete agreements work uh understand what they are share some examples about where it has been used in the past and also give some tips in terms of how do you get away from a non-complete class so that's going to be the focus of today's conversation so let's begin with understanding what's a non-complete agreement uh so first and foremost there are two types of agreements which your company can make an employee sign one is a non-complete agreement the other one is a non-solicitation agreement the non-solicitation agreement is actually much more easier to understand because it's more about preventing you from using your confidential data for example if you're working a sales and marketing organization you have a customer list of emails or phone numbers the company would not want you to take this data and go to a competitor or set up your own business and reach out to the same customers so non-solicitation is a type of non-complete agreement but a non-compete agreement by its very nature means that you cannot join competitors and you cannot join certain companies in the same line of work once you finish working for a company so this is what it means ideally a non-compete agreement is meant to target very senior employees within a company so the key catch is basically that are you in a position which can influence company strategy and the direction of the company so when you're talking about senior employees you're talking of at least vice president and above typically a ceo is a person who would be involved in the scenarios where non-complete agreements are involved entry level employees have really no influence on a company's strategy or direction business direction so it's a farce in terms of companies trying to enforce this on early and career employees let's look at some examples of where it has been used in the past so apple used to have a clique or a group of companies where it said that you cannot join these companies after you work in apple and they also used to do this is way in the past when they used to actually bring down the cost of hiring software engineers by fixing a certain wage and making sure that the competitors enter into a pact and not pay employees so this was banned by courts in california saying that what apple was doing was blatantly illegal and they were asked to pay heavy fines and very recent incident in india's where infosys has stepped in and said that if you have worked in infosys and if you have worked with clients like for example it could be a financial company like jb morgan where other competitors also work then you will not be able to join these competitors once you finish working so assume that jp morgan chase has a bunch of i.t projects which is it does outsource to infosys tcs ibm accent share and so on so an infosys employee will not be able to join tcs ibm or accent share for six months after they finish working so that really is what the non-complete agreement being asked by forces means so you should ask why is the company doing it actually it turns out that reinforces is facing a lot of our tradition it's facing around 27.7 attrition which is an extraordinarily high number and uh infosys should really reflect a lot on what's making employees leave are they developing employees are there issues with compensation are they motivating employees is it a great place to work these are the questions infosys should be asking unfortunately it's leaning towards trying to ban employees from joining competitors so it's legally not going to hold up in fact the same info 6 infosys spokesman i was reading in a newspaper today was saying that legally it's not possible for infosys to enforce these statutes and this legality in quotes so i have no idea why they're doing it because clearly this is not going to hold up in quotes and the reason why it cannot hold up in quotes is because there is section 27 of the indian contract act which basically says that you cannot enforce non-compete agreements in india it's totally banned whether it's u.s or india you cannot enforce non-complete agreements so clearly companies when they ask you to think about it and ask you to sign it it makes zero sense because it is just not okay as for the courts and the legal system it has been done in the past i can think of an example where the chief operating officer of vmware a person called rajiv ramaswamy who was of indian origin he moved from there to being the ceo of a company called nutanix now nutanix basically was trying to get him on board as fast as possible but vmware went out saying that there's a non-complete agreement you cannot join a company for six months so what typically happened in this case was that they basically asked the legal team basically did their groundwork asked rajiv to hold on for six months and after six months they made him join the job so he is right now the ceo of nutanix and you can understand that rajiv's case is different because he's the ceo of a company like if you're not in a senior position this really should not matter that's my take on this so there will be a lot of legal experts have weighed in in terms of what's happening in the infosys and everybody agrees that non-complete agreements is just not enforceable so what can you do if you face such a scenario so let's go down to what you can [Music] firstly understand that this entire process is not in your hands in terms of if you want to join a company for example if you have worked in a certain it company want to join another it company you have to let the other company know that hey you have a certain agreement with you with your existing company and there's a small risk of something happening and the company need to be aware of it in fact every company will do a background check they will do a legal review before releasing an offer so it is actually not your headache it's the headache of the company trying to get you in so it's not in your hands and companies typically what they do is they put you on some other projects suppose you worked on certain key projects and there is a non-complete part of it they put you on different projects for many months and then pull you into necessary projects so it is all up to the receiving company to figure out ways to get you in and it's not your headache the last piece i wanted to share a thought down was that typically the company from which you're leaving has no idea which company you're gonna join the only way they'll know of it is either if you update your linkedin profile so if some if you're frightened if you're not sure how to pursue a lucrative job opportunity i would say that don't update related profiles right and do not talk to your friends about which company you're joining just avoid spreading the word most companies do not chase down employees the key reason being that if you want to chase an employee they'll have to do to do it through the legal system they got to hire lawyers lawyers are extremely expensive and for an entry level employee or even if there's a manager or a director it makes very little sense to spend so much money on lawyers and going through the legal system when the outcome is not guaranteed so it's pretty much a bunch of nonsense from my opinion the non-complete agreements non-solicitation agreement is a little different because it's confidential data you use on behalf of the company and ideally you should not be taking company data and giving it to somebody else so there could be repercussions for stealing company data and one classic example i would say is uh this uh there was uh the self-driving cars which a guy called levantoski who worked in google founded and he created a lot of data and he stole the data and tried to go to uber and uh that was shot down google actually won the case and prevented the engineer for leaving and also made the engineer pay fd fine so this is in very very rare scenarios that these things happen the implementation of a non-solicitation clause or a non-complete clause so rest assured i think you are in a safe territory if you are early in your career you could do whatever you want with your career and don't bother much about what companies have to say okay i'm gonna stop right now if you have any further comments or if you have further questions let me know in the comments below press the like button or subscribe to this channel if you want to hear more of it bye