What types of covenants can be recognized in India?
Employment agreements in India commonly include language about safeguarding intellectual property, nondisclosure of sensitive information, and/or restrictive covenants (e.g., nonsolicitation, noncompete).
Can these covenants be enforced? How are they enforced?
In general, restrictive covenants are only enforceable for the duration of the employment agreement and, only in limited circumstances, enforceable after the employment expiration. Confidentiality, IP protection, and nonsolicitation covenants can be enforceable after termination for most employees. Noncompete covenants are not generally enforceable unless in reasonable circumstances, which can include an employee in a senior position who is privy to sensitive information or the noncompete is accompanied by payment. Even in those limited cases, noncompetes have been considered unenforceable, so covenants should be limited in scope and reviewed on a case-by-case basis.
Do my supported employees need to be compensated in return for restrictive covenants?
Noncompetes are generally not enforceable, but compensation in exchange for such a covenant can support limited enforcement. For more information, please reach out to Velocity Global through your normal process, and we will help you.