EVP Through Blank Cheque

In this story we try to understand the applicability of the non-compete agreement in the Indian context. Pepsi alleged that Coke approached Mr. Kochin Wu, one of the Territory Development Managers in Kanpur with an offer of increased salary and other benefits in case he moved over to Coke along with his sales team. The employment contract of Pepsi required them to not take up any employment with a competitor within one year of leaving Pepsi. Apart from this non-compete clause, a confidentiality agreement had also been signed by the employees which required them to keep all the information and knowledge acquired by them during their course of employment at Pepsi confidential. Out of the 10 members of the sales team, Mr Kochin Wu and 2 other employees joined Coke without serving the notice-period of 3 months and also breached the non-compete and the non-disclosure clause. Pepsi alleged this to be tortious interference by Coke and demanded an injunction for the employees. However the court did not grant an injunction citing that a situation of Once a Pepsi employee, always a Pepsi employee would amount to bonded labour and would not be in line with the freedom of occupation in a free market economy. The companies must learn to engage their employees by providing incentives and salary hikes to survive and face stiff competition.We also learned about the Chinese approach to non-compete agreement where the employees are paid reasonable compensation for signing the same and can be held liable to pay the damages to the employer.