Did A clause in an offer letter is legally binding even after relieved from the company

Recently, I worked with one of the companies (A) at the client location (company B) where I submitted my resignation, served the notice period, and got relieved from that company (A).

However, just before onboarding to the new company (C), I was informed that the work location for the role would be Hyderabad instead of Bangalore. As a family person with two children studying in Bangalore, I was unable to relocate to Hyderabad and, therefore, declined the offer.

Subsequently, I received an opportunity with another company (D) to work with company (B). I underwent an interview conducted by company (D) and was selected to join company (B).

I was not aware of the specific clause mentioned in my offer letter. Had I known about it, I would not have accepted the position with company (B) through a different company (D). Moreover, company (B) could have flagged this situation, as I had previously worked with company (B) through company (A).

I am simply an employee seeking job opportunities and taking the ones that come my way.

Below is the clause (Restrictive covenants) from my appointment letter for your reference:
"Following the termination of employment of the Employee by the Employer, with or without cause, or the voluntary withdrawal by the Employee from the Employer or its Client, the Employee shall, for a period of three years following the said termination or voluntary withdrawal, refrain from either directly or indirectly soliciting or attempting to solicit the business of any Client or customer of the Employer or its Client for his benefit or that of any third person or organization, and shall refrain from either directly or indirectly attempting to obtain the withdrawal from the employment by the Employer or any other Employee of the Employer having regard to the same geographic and temporal restrictions. The Employee shall not directly or indirectly divulge any financial information relating to the Employer or its Client or any of its affiliates or Clients to any person whatsoever."

Now it's almost 60 days post my relieving, the previous employer didn't settle my full and final settlement. In fact, based on the above clause, they have issued a show cause notice.

It would be really great if someone could guide me on how to proceed with the full and final settlement and the show cause notice.

Thanks,
Rock

Dear Rock Babu,

You were employed by Company D to work for Company B. But how did Company A come to know about your employment? Who leaked this information to them?

Similar posts have been raised on this forum, and I have given replies to them. I wish you had checked this forum. You may click the following link to refer to the ruling by the Delhi High Court:

https://www.citehr.com/571397-delhi-...n-compete.html

The famous editor of WION, Ms. Palki Sharma Upadhyay, was restrained by her employer, Zee TV Network, to join the competition. Again, the Delhi High Court set aside the restraint imposed by Zee TV. Click the following link to refer to the news:

https://www.newslaundry.com/2022/11/...join-network18

Further Course of Action: - You can approach Company B and apprise them of your problem. Speak to their HR and find out whether they can provide any help by talking to the authorities from Company A. If nothing happens, then write a letter to the MD asking to release the full and final settlement. Write that the violation of the non-compete clause and disbursement of the full and final settlement amount have no bearing on each other and need to be seen independently. If the authorities in Company A remain inclement, then come back to this forum and apprise us of what happened. We will guide you thereafter.

Thanks,

Dinesh Divekar

Hi Dinesh ji,

Thanks a lot for your prompt response!

My joining information was leaked by a colleague from the same consultancy (Company A) who appears to be envious of my transition to Company B.

I have been trying to contact the relevant team at Company A to schedule a meeting at their office and resolve this issue in person. However, they have not been responding to my calls or emails.

Currently, I am in touch with my manager at Company B and the HR team for assistance. They have told me that they will look into the matter and get back to me.

I will keep you updated as soon as I receive any further information.

Thanks again!
Rock

Dear Rock Babu,

If the staff at the lower level of Company A is unresponsive to your pleas, then you can write a letter to their Managing Director (MD). Now that you are not working with them, after the cessation of the employer-employee relationship, it is not binding on you to route your application through a proper channel. As the head of the company, whether to delegate decision-making to the juniors or make decisions on his own is his call.

You have informed your manager about the current situation. However, functional managers have a limited role when dealing with outsiders. You can write a letter to your employer, Company D, stating the general state of things or the combination of prevailing circumstances, and mark a copy of it to the authorities of Company B. To create an impact, I recommend not writing a routine email but a proper business letter.

Thanks,

Dinesh Divekar

Hi Dinesh Ji,

I thank you for your advice to avoid a routine email and will take care to craft the letter in a way that effectively communicates the gravity of the situation. Thank you for guiding me on this approach.

Thanks a lot!!
Rock Babu

Out of the total clause, only the following is enforceable:

The Employee shall not directly or indirectly divulge any financial information relating to the Employer or its Client or any of its affiliates or Clients to any person whatsoever.

For the rest, it is just a clause that violates sec 27 of the contract act and cannot be enforced (but please check with a lawyer on what your rights and duties are).

As long as Company B has no problem with your employment or deployment, you can stop bothering. One approach taken by another person I know is to send a mail, informing them that since they have not bothered to reply, you will consider that they have decided not to enforce any part of the above clause and finally, that you are going to take legal action to recover your outstanding payment.

Hi Saswata ji,

Thanks for your response.

"The Employee shall not directly or indirectly divulge any financial information relating to the Employer or its Client or any of its affiliates or Clients to any person whatsoever."

I hope the above point, which is part of the clause, will not be applicable to me as I received this notice after 60 days from the date of my relieving from the company, and I was relieved smoothly and without any hurdles. I also received my relieving and experience letters without any issues.

Please correct me if I am wrong.

Thanks.

Basically, if you have trade secrets and financial information (rates, etc.), you cannot disclose that at all to anyone. That is what the point says.

It does not matter that you got a smooth exit. You are required by law (and by your contract) to maintain confidentiality of business data, including financials.

For the rest, as I said, they are violations of Sec 27.