How To Stop Employees Joining Our Competitors - DOCX Download

Gentleman,
You have not read the entire thread. There is enough data provided in the thread stating that such agreements are invalid in law.
Regards

Dear Murali
Why should this be in the appointment letter? Do you want a bonded labourer or a contributing member to work with? If you can not provide an atmosphere (in all respect) for an employee to contribute so as he / she and the organisation grow together, why you want to chain him / her?
Keep in mind if an organisation is successful in creating a bonding between the organisation and the employee(s) from heart , then there is no need of any bond or fear of leaving. There are many organisations succeeded in and it is not a mere theory.
Suresh

Dear all senior members,

I have posted my original with heading as given below:

"Whole team wants to join Client's new local branch by leaving current employer"

and due to similarity of my query with this thread I was advised to participate in this thread. Please go through my original post to understand situation completely.

After reading all views I have understood that, no company can restrict any employee from joining competitor and I hope same thing would applicable for joining client companies too. Please confirm.

Below are my queries and are based on my original post:

Question 3: We are keeping things deep secrete and do not discuss, chat, mail about in it in office environment to avoid keeping any traces behind. But in case somehow, if our employer comes to know about the plan, what action can be taken against us?

Question 4: How much risk is involved in all this and what additional care we should take to avoid any unwanted circumstances.

Also please consider the fact that, major resource of income for our current employer is billing of our team and if this billing stops completely, company may not be able to survive for long.

Thanks & regards,

Aditya

You do not have to worry on this matter at all. In fact in the 70's, such a coup happened in Chennai. You would know the famous advertising agency in Chennai by name R K Swamy & Associates. Mr. R K Swamy was the branch manager of the Chennai branch of J Walter Thomson. It is now known as Hindustan Thomson Associates. Mr. Swamy on his own floated a company called R K Swamy & Associates and while pitching for business for JWT, was parallelly pitching for business for his own company. He got some good accounts. He then took some of his senior colleagues into confidence in the branch and they engineered one of the biggest coup in the Corporate world.

The lease of the building in which the JWT office was housed was expiring and so he spoke to the owner and took the lease of the building in the name of R K Swamy & Associates. One fine day, he made appointment orders for all the employees with an increase of salary by 50% and one level higher. He came to the office and called everyone for the meeting and told them that the building is now in the name of R K Swamy & associates. The telephones are in their name with new numbers. The furniture mostly in advertising agencies are hired and hence the furniture was theirs, since they changed the hirers name. He made an open offer in the group meeting and stated that they are all welcome to join his new advertising agency at a 50% higher salary and also one level higher. And in terms of advertising accounts, they have got prestigious accounts such BHEL, BEL, HMT and other such Public sector accounts and the revenue budgets are huge and the total revenue would plummet R K Swamy & associates to be one of the top 10 agencies in the country in the very first year. He spoke about a great career if all joined him. And those who desire to stay with JWT are welcome to leave the office.

All employees except 3 of them took the new offer. The three were asked to leave the office. All others were issued appointment letters and there was celebration with beer and lunch on the house. He then arranged to send telegrams in the name of each of the employee to JWT, HR department submitting their resignation and seeking immediate release.

The three employees went to a Post office and booked a trunk call to Mumbai, since there were no STD facility those days. After a wait of two hours, they got the call and informed the seniors in JWT as to what had happened.

The then CEO of JWT Mike Khanna rushed to Chennai. They consulted a lawyer and he was advised that nothing can be done, since the building lease had expired. The furniture was on rental and was now in the name of R K Swamy & Associates. All the papers and documents pertaining to JWT was neatly packed and kept aside and a telegram was sent to JWT asking them to pick up their property. The only thing available was the typewriters and the telex machine. But, they had some prestigious accounts such as Spencers, Ponds etc and they had to save them. So they immediately took a space in Hotel Connemara business centre and started servicing their clients. Emergency staff were flown in from other offices, till such time the vacancies were filled in.

Later after a couple of weeks, JWT went to court. But JWT lost the case, since the employees had complied with every clause of the terms of appointment and also had sent in cheques of one month notice period pay, which obviously was paid for by R K Swamy.

Though, unethically done so by R K Swamy, they were protected by law, since law has no emotions. So, as long as you are complying with the law, you don't have to worry.

Incidentally, R K Swamy's grandson is Arvind Swamy, who acted as hero in the famous Indian movie called Roja.

SInce you say the major billing is with the client, the company may go to the client and the client may decide to compensate them or fight it out in the court. It does not matter to you. You comply with the terms of appointment and be done with it. The company cannot sue you. And in case they do so, then most of the time, in such corporate coup, the employer fights the case in proxy. So be at peace.

Dear Anonymous,
Hats off to you for giving the case of RK Swamy.
My question to you, why you keep your identity hide?

Thanks Anonymous, Thanks for your reply.
As per your reply, we employees are on safe side and don't have to bother about legal issues. Whereas our employer can sue Client and demand for compensation. But as I have mentioned in my original post, our Client (a German based IT company) does not have any agreement with our employer which can restrict employing each others employee. So if our employer sues client, whose side will be strong legally? and what could be approximate minimum & maximum compensation amount client have to pay to employer if client loses the case?
Please provide your valuable feedback.

There is no premise on which the employer can sue the client, since there is no contract or agreement between them not to poach. Since you state that this client gives the bulk of the billing, it is all the more likely that your company owners will go and prostrate before the client and if they consider right, may give them some compensation.

But, then European MNC's are not known to be generous like American MNC's when it comes to these kind of issues. If it was an American MNC, they would have directly spoken to the owners of your company and bought out the company and also given them jobs as Vice Presidents or General Managers. In fact when MSN bought out Hotmail, they employed Sabir Bhatia as General Manager before he quit after a few years to start his own venture again. But European companies will look at the commercial angle and since its cheaper to hire the people than acquiring a company, they will hire the people.

And since your employers will have financial constraints, they are not likely to sue anyone, because, if they do so, they will be spending whatever little they have in court cases and they are aware that the German MNC will fight it as proxy for the employees and will have deep pockets.

So be at peace and since you guys are safe and since you are getting a better deal, no law in the world can stop you. You are well protected. And there is no way your employer is going to react. They will only try to salvage the business by trying to get more clients and build the business rather than fight legal cases

Thank you very much Anonymous Sir.
Other senior members of this forum have any other views/suggestions about my queries?
Please provide more feedback or else confirm views of Anonymous sir.
Thanks,
Aditya

Dear Venketesh,
As Hr Managers our focus should be more on retaining employees than stopping them from joining a competitor.
Our retention strategy should include attracting talents through unique recruitment practices,motivation employees to developing competencies which are rare and inimitable,learning opportunities,developing a community feeling and making employees a strategic partner.
What do you think?

Dear Venkatesh,
No employee can be stopped by joining the competitor unless they work in a senior position and involve in planning. Every employee has right to join any company they are interested. Its a fundamental right as per Constitution of India.