Delhi High Court Affirms Right to Job Mobility, Strikes Down Post-Employment Restrictions

0

Delhi High Court rules employers can’t stop ex-employees from new jobs, deeming restrictive contracts void under Indian law, protecting worker mobility.

In a powerful affirmation of individual employment rights, the Delhi High Court has issued a landmark ruling that reinforces every worker’s legal right to switch jobs without facing undue contractual constraints. The judgment, delivered on June 25, holds that restrictive post-employment clauses that inhibit job mobility violate the foundational principles of Indian contract law.

 

No Employer Can Block Your Career Move

Justice Tejas Karia, delivering the verdict, emphasized that freedom to seek better employment is a constitutional and legal right. “An employee cannot be confronted with the situation where he has to either work for the previous employer or remain idle,” he stated. The court ruled that post-employment non-compete clauses are void under Section 27 of the Indian Contract Act, 1872, which prohibits any contract that restrains a lawful profession, trade, or business.

 

The Case That Triggered the Verdict

The dispute centered on Varun Tyagi, a software engineer formerly employed by Daffodil Software, who had been working on the government-backed POSHAN Tracker project. After resigning and completing his notice period in April 2025, Tyagi joined Digital India Corporation (DIC) directly—owners of the very project he had worked on.

 

Daffodil Software took legal action, invoking a clause that barred former employees from joining any of its “business associates” for three years. A lower court initially upheld the restriction, prompting Tyagi to appeal to the High Court.

 

Court’s Key Observations and Verdict

Justice Karia’s judgment struck down the lower court’s order and made several pivotal declarations:

  • Restrictive covenants in employment contracts are viewed with suspicion under Indian law, especially since employees often have no choice but to sign standard-form agreements.
  • Post-employment restrictions are valid only when protecting genuinely proprietary or confidential information—not for stifling competition or worker mobility.
  • The POSHAN Tracker project belonged to the government, not to Daffodil Software, negating any claim of proprietary protection.
  • Employers may pursue damages for alleged breaches—but cannot legally restrain someone from working elsewhere.

 

A Stand Against Exploitative Clauses

The court rejected arguments that such restrictions help protect business interests, stating that Indian jurisprudence does not align with English law when it comes to validating non-compete clauses. Unless involving the sale of goodwill in a business, such contracts are unenforceable under Section 27.

 

Implication for Employers and HR Leaders

This verdict has wide-reaching implications for employment contracts across sectors. It serves as a wake-up call for companies to review and revise restrictive clauses, especially those that attempt blanket bans on post-employment opportunities. Legal experts warn that failure to do so may expose businesses to litigation and reputational risk. For further insights into the evolving workplace paradigm, visit 

PEOPLE MANAGER

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.