Cutting the Gordian Knot - Restrictive Covenants in Employment Contracts

Abstract

In India, in order to protect trade secrets, confidential information and human resources, it is common for companies and organizations to include ‘restrictive covenants’ in employment contracts. As a general counsel, I always kept a keen eye on these restrictive covenants, their applicability and how it impacts the employer-employee relationship in various geographies specially in India, the United Kingdom and the United States. While on one hand, it is wise to say that any such restraint on the freedom of an individual is against public policy and constitutional rights, on the other hand it is equally unreasonable for employers to suffer the misuse of these liberties by the employees. The departing employees often take the help of advance technology tools, delete the vital information from the machines after copying them and then blatantly misuse the copied information which may be in the form of trade secrets, list of customers, pricing and similar such information. These ex-employees then approach the same customer, give them much discounted price and thus play an important role in taking away the customers of the former employer. They also persuade directly or indirectly, other team members to join the competitor company.