Restrict an employee or contractor from working with competitors or soliciting clients for a defined period after leaving.
High Court for injunctions. Civil court for damages. Enforcement is limited post-employment.
Apply for injunction immediately on breach. Damages claim within 3 years of breach.
This coverage is provided by a practicing advocate. Specific sections cited depend on the facts you provide during drafting.
A Non-Compete Agreement (NCA) is a contractual restriction preventing a party (typically an employee, consultant, or business seller) from engaging in competing business activities for a defined period and within a defined territory after the agreement ends. In India, the enforceability of post-employment non-compete clauses is severely limited under Section 27 of the Indian Contract Act — courts consistently strike down overly broad post-employment restrictions.
Use a Non-Compete Agreement for: (1) During employment — prohibiting employees from working for competitors while employed (fully enforceable); (2) In business sale agreements — preventing the seller from competing with the business they just sold (enforceable if reasonable in scope, duration, and territory); (3) For key consultants and senior advisors — carefully drafted non-solicitation clauses. Avoid pure post-employment non-competes as they are rarely enforceable.
Section 27 of the Indian Contract Act, 1872 declares agreements in restraint of trade as void, with exceptions for: (1) sale of goodwill (seller of a business can be restrained from competing in a reasonable area for a reasonable time); (2) partnership dissolution (exiting partner can be restrained). Post-employment non-competes for employees are void under this provision per consistent Supreme Court and High Court judgments. Non-solicitation clauses (not poaching clients/employees) have better enforceability.
A post-employment non-compete (for employees) is generally unenforceable in Indian courts — former employees can ignore it and work for competitors without legal consequence. However, non-competes during the employment period, non-solicitation clauses, and NDA obligations (confidentiality, no disclosure of trade secrets) remain enforceable throughout.
Post-employment non-compete clauses for employees are generally void under Section 27 of the Indian Contract Act. Courts have consistently refused to enforce them. During employment, they are enforceable. For business sale agreements (seller's non-compete), they are enforceable if reasonable in geographic scope and duration.
Focus on enforceable alternatives: NDAs (protecting trade secrets and confidential information), non-solicitation clauses (preventing poaching of clients and employees), IP assignment agreements (ensuring all work product belongs to you), and garden leave provisions (requiring the employee to serve full notice period without access to clients/information).
Garden leave requires a departing employee to serve their notice period at home (away from clients and office) while still being paid. During this period, the employee cannot work for competitors. Garden leave is enforceable (unlike post-employment non-competes) and achieves similar commercial protection.
Yes. In a share purchase or business sale transaction, the seller is typically required not to start a competing business for a defined period (2–5 years) in the relevant geography. This is explicitly recognised as an exception to Section 27 ICA (sale of goodwill exception). The restriction must be reasonable in scope.
Non-solicitation clauses (preventing a former employee from approaching your existing clients to take business away) are more likely to be enforced than outright non-competes. They must be reasonable in scope — typically limited to clients the employee actually dealt with during employment.
Indian courts have not set a fixed maximum. Duration up to 3–5 years is typically accepted as reasonable for business sale non-competes. The duration should match the nature of the business — a fast-moving consumer business may need shorter protection than a relationship-heavy professional services firm.
Partially. Non-solicitation and NDA obligations for contractors are generally enforceable. Post-engagement non-competes are still subject to Section 27 scrutiny. Courts distinguish between employees (rarely enforceable post-employment) and business sellers/professional consultants (more flexibility).
The geographic scope must match the actual business footprint — a non-compete covering 'India and the world' for a local business will be struck down. Limit the scope to the territories where the business actually operates and where the employee had client relationships.
Please confirm all of the following before proceeding with your Non-Compete document:
Please confirm all eligibility conditions above to proceed. If you are unsure about any point, you may not be eligible for this type of notice.