Restrictive Covenant
What is a restrictive covenant?
A restrictive covenant is a contract clause that limits certain actions an employee can take, either during their employment or, more commonly, after it ends. Non-compete agreements, non-solicitation clauses, and confidentiality provisions all fall under this umbrella. The common thread is that a restrictive covenant restricts freedom the employee would otherwise have, in exchange for protecting something the employer considers legitimately at risk.
Why the same restrictive covenant means different things in different countries
Here's the part that trips up a lot of companies scaling internationally. A restrictive covenant that's standard, enforceable boilerplate in one country can be functionally meaningless, or even legally void, in another. Courts evaluate a restrictive covenant based on whether it's reasonable in scope, duration, and geography relative to a legitimate business interest, and what counts as "reasonable" varies enormously by jurisdiction.
India is a clear example of this gap. Broad restrictive covenant clauses restricting where someone can work after leaving a job are generally unenforceable there under Section 27 of the Indian Contract Act, which voids agreements restraining a lawful profession or trade. A company that takes its US-drafted restrictive covenant, changes the country name, and drops it into an Indian employment contract is very likely including language that a court simply won't enforce.
What does hold up as a restrictive covenant in India
This doesn't mean Indian employment contracts have no protective teeth at all. Confidentiality obligations covering trade secrets and proprietary information tend to be enforceable. Non-solicitation clauses preventing a former employee from actively poaching clients or colleagues also tend to hold up considerably better than a blanket post-employment restriction on where someone can work next.
The practical lesson here is that a restrictive covenant needs to be built for the specific country where the employee actually works, not translated from a template built somewhere else. What protects a company in California doesn't automatically protect the same company in Bangalore, even if the underlying business concern, protecting client relationships and confidential information, is identical.
How this plays out for companies hiring through kaam.work
For companies building a team in India through an Employer of Record, employment contracts should include restrictive covenant language specifically drafted to be enforceable under Indian law: strong confidentiality provisions, reasonable non-solicitation terms, and realistic expectations about what a broader non-compete clause can and can't accomplish there. This is a meaningfully different exercise than simply reusing a US employment contract template, and it's exactly the kind of detail that gets missed when a company handles international hiring without local legal expertise.
The bigger lesson about restrictive covenants and global teams
If your company operates in multiple countries, a single restrictive covenant template almost certainly isn't serving you well everywhere. What's aggressive and fully enforceable in one jurisdiction might be watered down or entirely void in another. The companies that get this right tend to build restrictive covenant language on a country-by-country basis, working from local legal guidance rather than a single global template, even if that means more upfront work getting the contracts right.
Frequently asked questions
- Is a restrictive covenant enforceable in India the same way it is in the US?
- Not generally for post-employment non-compete restrictions. India voids most such clauses under contract law, though confidentiality and non-solicitation provisions tend to hold up better.
- What's the difference between a restrictive covenant and a non-compete agreement?
- A non-compete agreement is one specific type of restrictive covenant. The broader category also includes non-solicitation clauses and confidentiality obligations.
- Should I use the same restrictive covenant template for all countries where I hire?
- This is risky. A restrictive covenant that's fully enforceable in one country can be void or significantly weakened in another, so localized drafting matters.
- Does an Employer of Record handle restrictive covenant drafting for international hires?
- Through kaam.work, employment contracts are structured with restrictive covenant provisions appropriate to what's actually enforceable under Indian law, rather than a generic template.
