What types of contracts does AMLEGALS handle?

AMLEGALS provides comprehensive contract advisory across 43+ contract types including Technology contracts (SaaS, AI/ML, Cloud Services), Data Privacy agreements (DPAs, DPDPA compliance), Commercial contracts (MSAs, Supply, Distribution), IP & Licensing, Employment agreements, and International Trade contracts.

What is the TCL Framework for contracts?

The TCL Framework is AMLEGALS proprietary approach that examines every contract through three lenses: Technical (understanding the operational realities), Commercial (aligning business objectives), and Legal (ensuring compliance and risk mitigation). This integrated approach ensures contracts that work in practice, not just on paper.

Does AMLEGALS handle DPDPA-compliant contracts?

Yes, AMLEGALS specializes in DPDPA-compliant contracts including Data Processing Agreements, Cross-Border Transfer Mechanisms, Data Sharing Agreements, and Consent Management frameworks. Our Vibe Data Privacy™ framework ensures comprehensive compliance with the Digital Personal Data Protection Act, 2023.

Can AMLEGALS help with AI and technology contracts?

Yes, AMLEGALS has dedicated expertise in AI/ML Contracts, AI Governance agreements, AI Training Data Licensing, SaaS Agreements, Cloud Services agreements, and System Integration contracts. We address emerging issues like algorithmic accountability, model ownership, and AI liability allocation.

Are non-compete agreements enforceable in India?

Post-employment non-compete agreements are generally unenforceable in India under Section 27 of the Indian Contract Act, which voids agreements in restraint of trade. While employers commonly include such clauses, courts have consistently declined to enforce them. Restrictions during employment (exclusive service) may be enforceable. The analysis differs for sale of business contexts.

What alternatives exist to non-compete clauses?

Effective alternatives include: robust confidentiality agreements protecting specific information, non-solicitation provisions targeting customer and employee relationships, garden leave with continued salary during restriction periods, equity and deferred compensation that vests over time, and non-disclosure of trade secrets which has separate legal protection.

What is garden leave and how does it work?

Garden leave is a notice period during which the employee remains employed and paid but is not required (or allowed) to work. Since employment continues, restrictions on working for competitors are restrictions during employment rather than post-employment. The employee cannot work for a competitor because they still work for the current employer. This mechanism has better enforceability prospects.

How should non-solicitation be structured?

Non-solicitation should: target specific relationships (customers, employees with whom the departing employee worked), have reasonable duration (6-12 months is more defensible than longer periods), and avoid functioning as an indirect non-compete. Focus on preventing use of specific relationships rather than general business competition.

Non-Compete Agreements | Restrictive Covenants India

Overview

Non-compete agreements attempt to restrict where employees can work after their employment ends. While employers have legitimate interests in protecting confidential information, customer relationships, and workforce investment, these interests must be balanced against the employee's fundamental right to earn a livelihood. Indian law approaches this balance with considerable skepticism toward post-employment restrictions.

Section 27 of the Indian Contract Act declares void any agreement in restraint of trade. Indian courts have generally interpreted this to render post-employment non-compete clauses unenforceable, with limited exceptions. This legal position contrasts sharply with many other jurisdictions where reasonable non-competes are routinely enforced. Employers seeking to protect legitimate interests in India must therefore consider alternative mechanisms.

The alternatives to unenforceable non-compete clauses include: robust confidentiality agreements that protect specific information, garden leave arrangements where the employee is paid during a restriction period, non-solicitation provisions targeting customer and employee relationships rather than competition generally, and contractual structures that incentivize loyalty rather than attempting to compel it.

Key Considerations

1

Enforceability Assessment

Realistic evaluation of whether proposed restrictions would be enforced under Indian law.

2

Alternative Protections

Confidentiality, non-solicitation, and other mechanisms that achieve protection within legal constraints.

3

Garden Leave

Paid notice periods during which restrictions apply while employment continues.

4

Geographic and Temporal Scope

Narrowing restrictions to the minimum necessary to address legitimate interests.

5

Compensation Linkage

Additional consideration for any restrictions that increases voluntary compliance likelihood.

6

Industry Practice

Understanding how similar employers in the sector approach these restrictions.

Applying the TCL Framework

Technical

Identifying specific confidential information requiring protection
Understanding the competitive landscape and potential harm
Assessing role-specific exposure to protectable interests
Evaluating technical barriers to competition
Understanding knowledge transfer and training investments

Commercial

Valuing the interests sought to be protected
Structuring consideration for restrictions
Modeling cost-benefit of garden leave approaches
Addressing equity and deferred compensation alignment
Managing executive departure scenarios

Legal

Drafting within Indian Contract Act constraints
Structuring alternatives to direct non-compete
Creating enforceable confidentiality provisions
Addressing non-solicitation with appropriate scope
Building dispute resolution suited to urgency

“

"The question is not whether a non-compete clause can be drafted, but whether it can be enforced. In India, the answer is usually no. Smart employers focus instead on the protections that are enforceable - confidentiality, non-solicitation, and economic incentives for loyalty."

AM

Anandaday Misshra

Founder & Managing Partner

Common Pitfalls

Overreach

Provisions that are broader than necessary, increasing unenforceability risk and employee resistance.

Template Adoption

Using provisions from other jurisdictions without adapting to Indian law constraints.

Confidentiality Conflation

Treating non-compete and confidentiality as interchangeable when they have very different enforceability.

No Consideration

Adding restrictions without additional consideration, weakening any enforcement argument.

Practical Ineffectiveness

Provisions that cannot practically be monitored or enforced even if legally valid.

Legal Framework

Section 27 of the Indian Contract Act provides that every agreement by which anyone is restrained from exercising a lawful profession, trade, or business is void to that extent. Courts have consistently held that post-employment non-compete restrictions fall within this prohibition. Limited exceptions may exist during employment (e.g., exclusive service clauses) and potentially for genuine sale of goodwill situations. The Competition Act may also be relevant where restrictions affect market competition. Global employers must reconcile Indian law positions with different rules in other jurisdictions.

Practical Guidance

Accept that post-employment non-competes are likely unenforceable in India.
Focus on robust confidentiality agreements with specific scope.
Consider garden leave for senior positions with appropriate funding.
Structure non-solicitation carefully to target relationships rather than competition.
Use equity and deferred compensation to incentivize rather than restrain.
Maintain global consistency where possible while respecting local law limits.

Frequently Asked Questions

Related Contract Types

Employment Agreements

Employment & HR

Comprehensive contracts addressing compensation, duties, and termination provisions

Confidentiality Agreements