Delhi high court reiterates legal right to switch jobs

Hindustan Times

6 hours ago

Looking for better job prospects after quitting? The Delhi High Court says that's legal your right—and no company can take it away. Any clause that forces employees to choose between going back to their old boss or staying unemployed, the ruling declared, is not allowed under Indian law. (HT Archive)
In a significant ruling aimed at curbing the misuse of restrictive employment contracts, the Delhi High Court has ruled that employers cannot prevent former employees from taking up new jobs, including with their clients or associates. Any clause that forces them to choose between going back to their old boss or staying unemployed, the ruling declared, is not allowed under Indian law.
'An employee cannot be confronted with the situation where he has to either work for the previous employer or remain idle,' said justice Tejas Karia. 'Freedom of changing employment for improving service conditions is a vital and important right of an employee.'
In its June 25 judgment, the court ruled that post-employment non-compete clauses—common in contracts across sectors—are 'void' under Section 27 of the Indian Contract Act. This provision invalidates any agreement that restrains someone from pursuing a lawful profession, trade, or business.
The court also issued a wider critique of employment contracts that restrict worker mobility. 'An employer-employee contracts, the restrictive or negative covenant are viewed strictly as the employer has an advantage over the employee and it is quite often the case that the employee has to sign standard form contract or not be employed at all.'
The case involved software engineer Varun Tyagi, who had worked on the government's POSHAN Tracker project while employed by Daffodil Software. The project, owned by the Digital India Corporation (DIC), is a key national initiative aimed at improving child nutrition. After completing his notice period in April 2025, Tyagi joined DIC directly.
However, Daffodil Software took him to court, citing a clause in his contract that barred him from joining any 'business associate' for three years after leaving. A district court agreed and restrained Tyagi from working with DIC, forcing him to approach the high court.
In overturning the district court's order, the high court not only allowed Tyagi to take up his new role but also made strong observations on employment rights. It said companies cannot use broad, catch-all clauses to prevent former employees from working elsewhere, especially when they were not hired to develop any proprietary technology.
Justice Karia found that Daffodil had no grounds to prevent Tyagi from joining DIC, especially since he hadn't created any proprietary software or confidential intellectual property. All rights to the POSHAN Tracker project, the court noted, belonged to the government, not the private contractor.
'Freedom of employment cannot be restricted merely because someone worked on a sensitive project, particularly when that project was not owned by the employer,' the court said. It added that such freedom cannot be restricted just because someone once worked on sensitive projects.
Importantly, the court explained that Indian law is clear that any agreement that blocks someone from doing their job, unless it is about selling goodwill of a business, is not enforceable. Justice Karia underscored that Indian jurisprudence differs fundamentally from English law, where limited post-employment restraints may be upheld based on reasonableness. Under Indian law, such restrictions are permissible only in the rare case of a sale of business goodwill, explicitly carved out as an exception in Section 27. The court held that contracts that inhibit future employment, without protecting genuine proprietary interests, are void.
The court also rejected the argument that such clauses were justified to prevent misuse of confidential information. 'Negative covenants after termination can be granted only to protect genuinely proprietary information or prevent client solicitation. But none of the cases cited by Daffodil support restraining employment per se,' the judgment read.
Even if an employer believes there has been a breach of the contract, the court said, they can seek monetary damages, but cannot not stop someone from working.