When I resigned from one of the companies I worked with, the acceptance letter, service letter, relieving letter and final cheque came in three tranches. The first two pointed out that for the next one year I could not join competition or indulge in any competitive activities as per my employment clause number 11.3.
I had made it known to my bosses that I was joining a rival, but they put the HR guy in front of me with these reminders. I cheekily wrote back to HR that the company should pay my salary for the next year if I had to sit at home for a year to honour their agreement. They said it was their standard global template and went silent on the pay. I reminded them that they too had hired me from a competing firm and made me break a few similar obligations to my previous employer. Non-poaching agreements that organisations routinely enter into are another area of blatant integrity violations by employers. Often, leaving employees join another firm for a couple of months only to be hired from there eventually by the rival firm. Many employees then declare on their LinkedIn page that they have joined a “confidential” firm fearing a backlash.
I just looked up one of my past employment contracts. It is about 28 pages long, and talks mostly about what I wasn’t supposed to do! As organisations continue to behave like feudal landlords of the past, employees have no choice but to innovate and beat them. So, should we blame the employees for breach of clauses in the contract which all favour the employer? The worst part is most organisations don’t even follow up on violations of non-poaching or non-competing citing the logistics of execution.
So why do they have clauses like these? Everybody who creates and signs the agreements knows it’s next to impossible to implement this anti-trade clause, they know it may work as a deterrent to employees and prospective employers. Every year organisations in India churn out millions of these anti-compete employment letters to recruit employees who break similar contracts with their employers to join them. It’s a shame we continue to do this knowing fully well that it’s not enforceable. Some of the organisations selectively send legal notices to their leaving employees purely as vendetta. A former colleague received a notice from her Fortune 500 employer that she should pay them ₹10 lakh in damages as, despite signing a non-solicitation agreement, she had approached their client. She promptly sent them a note reminding them of Section 27 of Indian Contract Act (Agreement in restraint of trade or exercising one’s lawful profession) after which they went quiet, but it did distract her from her work for a few days. I am sure that is the kind of kicks her former boss had hoped it would provide.
I had asked my legal head when I was leaving one of my former employers why companies still practised this. He said: “You never asked this when we were hiring people with these clauses when you were with us. Occasionally we send out legal notices to erring former employees to act as an example to existing employees.” He added that an organisation would have the resources to go after an employee, whereas the person leaving would have to fight the case alone and pay for themselves. This again reveals the one-upmanship mentality with which organisations operate.
There are a couple of other things you need to fight when you announce your intention of joining a rival firm — cynicism and hostility from bosses and peers. Hostility comes from bosses in the form of extending notice periods, giving you jobs that stretch just to frustrate you and delay your leaving. We all know this behaviour does no good to their Glassdoor ratings, but should they really care about people who do not matter any more?
I find it amusing that in the age of millennials organisations continue to come up with restrictive employee contracts. In the world of shorter employee tenures, flexible working arrangements and freelancers, I wonder why we all are trying to be over-restrictive in our employee contracts. It’s difficult to protect organisation secrets in an invasive world. Any information a competitor wants to know can be obtained in no time. Why waste time increasing paper work which has no meaning?
I have decided that in my entrepreneurial venture the employee offer letter will be a simple two-page engagement note which radiates trust!
(The author is a prolific commentator on workplace dynamics. He is now pursuing his entrepreneurial dreams in the talent solutions space.)