SLIDE 1

Introduction to ER Session learnings objectives:

Understand what is ER Understand the various actors, processes, outcomes and the contexts
that affect ER Understand the emerging trends in ER in India
What is work?
Introduction to ER
Paid work = employment
Three dimensions of employment
Master Servant Some exchange Mostly monetary in nature
ER then can be defined as
Conditions under which
employer decides to hire
Employee decides to sell his ability/skill
There is an exchange
Wage-work bargain
Between employer- employee
Both try to maximize their gain
Diverse interests may lead to conflict hence need to be regulated which is regulated further
Certain points to note
Power asymmetry between employee and employer
Labour is not a commodity
Apart from wages and effort employee surrenders autonomy employer directs the employee Conditions of citrus paribus
dynamic in nature
ER Thus is a result of...
Market influence aspects of wages
Managerial relations aspects of work load and time
Not as ingles hot game Due to different interests conflict is inherent
Actors of ER
Three traditional actors of ER Employer Employee/Worker State
Other actors civil society groups, supranational bodies etc.
Types of regulation
Unilateral by management, also known as internal regulation
Bilateral dialogue between employees/trade unions and management also known as external regulation
Mixed mix of both internal and external
Time and motion studies Frank and Lillian Gilbreth
Aspects of efficiency
Time is a proxy for the work done
Major legislations mention the aspects of time of work
Practical examples Dominos/UPS/Assembly line
Qualification
Concept of signalling
KSAO Knowledge, skills, abilities and other attributes
Unitarist HR perspectives responsible, autonomy,
Operational knowledge cognitive/abstract
Ability to multi-task
Wages ER = Wage effort bargain for the effort put what
Wages complex interplay Bargaining Moral hazard/shirking problems control systems Systems of appraisal and
compensation
The ideologies of ER
Unitary perspective Critique
Unity of interest Unrealistic/impractical between employee and employer
Based on cooperation
No place for conflict
Conflict exists diverse interests
Pluralist perspective
Accepts conflict Accepts the diverse interests conflict
Conflict resolution through dialogues and rules Critique
Based on radical perspective
Power asymmetry is not addressed
Too much focus on the process rather than outcome
The ideologies of ER
 What shapes the ER
Managerial Prerogative
ER Joint Regulation
ER is situated.
Restrictive employment direct control
Diffuse ER responsible autonomy
The power perspective
Some more points:
control/autonomy power is involved
Is the exchange truly between equal
Is one party more powerful?
Introduction to ER
Session learnings summarized: ER Definition: Wage effort bargain Aspects of exchange
Understand the various actors, processes, outcomes and the contexts that affect ER
Three traditional actorsOther contemporary actors and their roles.
SLIDES 2:
Re-cap Session 1 ER Definition: Wage-effort bargain, Aspects of exchange
Employee, Employers and the State are the three traditional actors. Other actors such as employers association, supra
national bodies, civil society groups may also influence the ER
Trends in ER in India Two distinct phases in Indian ER post-independence
Pre-Liberalizationi.e. before1991 Post liberalization i.e. after 1991 introduction of the New
Economic Policy
Characteristics of Pre-Liberalization ER
Logic of Industrial Peace
State intervention
Characteristics of Post liberalization ER
Logic of competition
Subtle reforms
Trends in ER
Role of state
Subtle Labour Reforms
Soft methods
SEZ
Disinvestment route
Passing the buck to the State GovernmentsTaking advantage of concurrent nature of subject
Trends in ER Changeinattitudeofjudiciary
Change in outlook of judiciary
SC affirmed the policy independence of executive
Critical about strike
Use of ESMA
Reviewed and reversed own earlier orders on contentious
Trends in ER Managerial strategies
New Age Unitarist HR policies Union suppression/union busting activities
Illegal closures/lockouts Exploiting the loop holes in labour laws
Trends in ER
Inadequate Trade Union response
Lack of unity Fragmentation and lack of cooperation on key issues
Neglect of the burgeoning informal sector/informal economy

To Sum Up Trends in ER in India

Logic of Industrial Peace replaced by Logic of Competition
The trade union shave lost/slowly losing state patronage
Judiciary also has changed views
New Age HR prax is coupled with union busting/suppression activities.
Employee life cycle revisited
 Key take away
Modern day HR/ER praxis is heavily influenced by unitary perspective
We need to understand the economic, social, political, and legal influences on ER in the various processes.
Three major parts: pre-employment, during employment and post-employment ER has some definite role to play
Contracts
What is a contract?
Agreement
Something in return or at stake
Between two or more parties Definition of contract as per Contracts Act:
All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration
and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in
force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of
witnesses, or any law relating to the registration of documents.
Promissory Estoppel Legal principle that promise is enforceable by law
Essentials of a contract
Offer and acceptancelegally binding
Consentvoluntary in nature
The contracting parties need to be competentcapable
Legally valid consideration
Forms of Contract
Social Contract
Normativeinherited
Shared collective beliefs
Discussed at the level of society/collective Eg. Currency17
Eg. Beliefs, norms etc.
Promissory Contract
Paid for promise Commitment for future behaviour
Exchangevoluntary
Salient features of the employment contract Promissory contractFormal agreement between employer and Employee
Details the rights and obligations towards each other Exchange
Types of Contracts Expressed vs Implied
Written vs Verbal Agreement vis--vis Contracts
A real agreements contracts? A real Contracts Agreements?
Agency Theory and Contracts
Agency Theory Rationality assumption
Principal/Agent Agent/Manager acts on
behalf of Principal Lack of trust on Agent
Information Asymmetry Moral Hazard & Adverse selection
Too much focus on the issues and behaviours of agents
Transaction Cost Economics and Contracts
Transaction costs Long term perspective created because of: uncertainty, opportunism, limited information and lack of
competitiveness in bargaining
 Contracts help in limiting these costs
of contractleads to creation of trust
Asset specificity
Psychological Perspectives on Contracts
Ambiguity in contractsubjective terms
Role of perceptions
Individual differences in cognitions, information processing
Individuals belief regarding the terms and conditions of a reciprocal exchange agreement between that person and another
party
Implied Contract
Subjectivity
Unwritten/Explicit
More relationship based
Mutual obligation existing at a particular level (dyadic, organization) patterns based on interactions

Session 3

Government
Usually an order
Eg. IAS/IPS/IFS/DRDO/Army appointed under the order of the President of India.
Usually contains a date by which candidate is expected to report for work
Private
All other places offer acceptance employment contract
A date till which order is validEmployment
Offer letter also referred to as intent letter or intent of offer etc.
Offer letter contains a date by which acceptance needs to be indicated post which a final date to report is given/decided
Certain important points in the offer/emp letter
It should specifically be addressed to prospective candidate
Should have date on which it has been created
Should have the date till which it is valid
Digitally signed/Signed by appropriate authority
Certain clauses in the offer/contract
Misrepresentation of facts may lead to immediate termination.
Certain types of employment requires medical fitnessif found medically unfit, may be asked to leave. Eg. Colour blindness
Details about remuneration/leave/explicit mention not to moonlight.
Always better to have escape clauses
Recall from previous sessions
Employment essentially calls for a future commitment in terms of some effort and time
Which is the case with most of the modern employment/jobs
Reasons under which either party can seek to postpone/defer/renege employment
Employee Employer
Finds another job
May go for higher studies
Medical exigency
Other reasons.
Effect of Macro Economy Recession
Restructuring leaving certain posts redundant
Special cases of restructuring merger/demerger
Closure/rationalizing of business
Consequences of improper handling
Loss of reputation/brand
May be subject to litigations/liability towards breach of contract.
Loss of confidence/trust
Material loss interm softime, valuable resources
Legal aspects of breach of contract
Employer
In case prospective employee reneges on a contract
Employer able to demonstrate that the nature of job to be done by the prospective employee was very specific and niche to
him/her
Suppose employee requests for deferring of joining dates discretion of the employer
Employee
 Depends on the various provisions provided in the contract
In case no provisions are there, then employee can claim compensation.
Normally such compensation is towards expenses incurred in preparation for the employment as well as in some cases

On handling such cases

While drafting the contract itself make necessary provisions
Alternately as an employee be aware of the possibilities of changes read and understand the terms and conditions carefully
In practice, no set rules/laws governing such cases. Mostly companies handle it on a case by case basis

Specific guidelines
Explore possibilities of alternative arrangements to honour commitment
Alert the concerned candidates as soon as possible
If an external party involved also keep them in loop of communications
In case of deferred employment be in touch and also think of offering financial assistance if needed
Specific guidelines if offer revoked Try to minimize loss of reputation
Offer assistance
Short term financial assistance Reimbursement towards specific expenses incurred Alternate employment
Beyond the realm of law Ethical considerations
Aspects of fairness
Morality of actions
Use own judgement
In absence of binding legislations, ethical considerations take precedence
Fair and equitable considerations for any action
Prospective employee
In case of confusion better to ask
Read any document/terms and conditions carefully and get things clarified
Ask for relevant information
Do not jump to conclusions
Carefully go through the financial statements
Employer
Some Dos and Donts
Supply accurate information to the prospective candidates
Be clear about the requirements
Be open and accept certain things you do not know rather than committing to them

Session 4
Employment contract
An agreement expressed or implied/written or verbal
Outlines the rights and duties of the employee and the employer towards each other
Most firms have a standard employment contract which is rolled out by making cursory changes

Why a written agreement

Clearly mention the duties and obligations
Expectations Nature of duties Duration (in case of fixed tenure appointments)
Details of wage/benefits Nature of employment/separation clauses
Other special types of clauses eg.Bond

An employment agreement
Within the ambit of the law of the land
Limited usage of ambiguous terms/references avoid company specific/technical jargon
Between two parties In case of dispute the weaker party is given
benefit of doubt

Specifics of employment agreement

Description of duties Designation Location Duration of working hours-Reporting relationship Exact nature of
responsibilities Not to moonlight
Caveat on responsibilities
change/additional duties
 Specifics of employment agreement
Duration/term
If fixed term employment then the time for which it is valid
If training then duration of training Probation then duration of probation
Compensation(monetary)
H Form of wages hourly/weekly/monthly
H Details of overtime if applicable
H Generally, compensation is annualized
H Details of allowances
7

Specifics of employment agreement

Benefits - Monetary
Statutory benefits such as pension, gratuity, pf, bonus, insurance,
Other benefits like LTA, childrens education, esops if any
Eligibility for production incentives or other relevant incentive plans
Benefits Non-monetary
Details of leave (earned leave, casual leave, sick leave)
Accommodation if any Food coupons
Entitlement for memberships/ vacations/holidays/sabbaticals/
professional

Specifics of employment agreement

Termination
When and how the relationship can be terminated
Any monetary implications arising who will bear it
The age of retirement/superannuation which leads to natural termination
Training bond related clauses (to be covered separately) Restrictive covenants if any (to be covered separately
during the course)
Medical fitness depending on nature of work9

When to use a written contract

No said rule depends
Recommended for those employees With niche/specific skills to the company Whose absence may impair the business
significantly
In India, almost all levels of employees have some sort of a written contract exceptions are badli, daily wagers

Employment at will
An employer can terminate the employment
Any reason No reason With or without notice
Origins
British laws vis--vis USA
British laws presumed long term hiring and reasonable notice of
termination
Indian law shave a British origin
Termination
Due to death
Due to voluntary retiring/attain super annuation
On grounds of ill health
Disciplinary action ESO
Duration of contract is over Others
Retrenchment defined in IDA
Means the termination by the employer of the service or a workman for any reason whatsoever, otherwise than as a
punishment inflicted by way of disciplinary action, but does not include
Voluntary retirement of the workman; or
Retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and
the workman concerned contains a stipulation in that behalf; or

Termination of the service of the workman as a result of the non- renewal of the contract of employment between the employer
and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained
 therein; or
Termination of the service of a workman on the ground of continued ill health

Some modern terms for Retrenchment

Rightsizing
Downsizing
Rationalizing
However not limited to discharge of surplus labour
Probable Scenarios of retrenchment
Termination of service due to lack of performance
Termination of service of a probationer
Striking off name from muster rolls/handling pink slips
Superfluity/surplus labour

Retrenchment also has to be understood

Definition of workman in IDA
Industry/Industrial establishment
25Bcontinuous service
25N&25FConditions precedent
25GProcedure;25HRe-employment16

Termination for any other reason

Amounts to Retrenchment Relevant provisions of IDA
Effectively rendering employment at will ineffective Recall employee is the weaker party and hence benefit would be
given to him

In summary Employment at will stands almost no validity in India

Adhere to the relevant provisions in the contract
Termination for reasons other than those specified below amounts to retrenchment and hence specific provisions of IDA are
invited
Misconduct/disciplinary action conditions of service or ESO Retirement/superannuation Non-renewal of contract On
grounds of ill health

Session 5

Some of the legal provisions ArticlesConstitution of India

Article12Definition of state includes,
Government of India/Parliament (Executive and the Legislative)
Respective state govts./Legislatures(Executive and Legislative)
Local or other authority within the territory of India
Local or other authority under the control of GOI

Some of the legal provisions

ArticlesConstitution of India
Article 13 Laws inconsistent with or in derogation of the fundamental rights
Article19Fundamental rights FR not absolute - Reasonable restrictions 19(2)-19(6) Article23Prevention of forced
labour/human trafficking

Forced labour

Peoples Union for Democratic Rights Vs. Union of India (Asiad Case)
Forced labour given a very wide interpretation
Physical force Force exerted by some legal provision
Force because of various compulsions like hunger, poverty, destitution
Any factor which deprives a person of alternatives
 Also includes work extracted without remuneration
Also includes contract entered into through consent

Some more provisions within Contract Law

Section15IndianContractActCoerciondefined

Committing or threatening to commit any act forbidden by the IPC

Unlawful detaining or threatening to detain a property to the prejudice of any person whatsoever

With the intention of causing any person to enter into an agreement

Section 19 Indian Contract Act void ability of agreements without free consent Coercion Fraud/misrepresentation
Contract is voidable

Some more provisions within Contract Law

Section 73 Indian Contract Act Compensation of loss or damage due to breach of Contract
Contract broken Party who suffers entitled to compensation Compensation not to be given for remote and indirect
loss
Section 74 Indian Contract Act Compensation of breach of contract where penalty stipulated for
A sum named in the contract
Any other stipulation by way of penalty
reasonable compensation not exceeding the amount or the penalty stipulated

Employment contract consists of

Duties and obligations of employee and the employer

Details of wage/benefits/entitlements Conditions of service When/how can the contract be terminated

But some special clauses...

Most of the modern employment contract contains some reference to an EMPLOYMENT BOND
It is like any other contract/or an additional clause within the employment contract

Necessity for the employment bond

Demand supply at work

Employer wants to protect his interests

Bond as a deterrent against frequent job change

Supposed to help curb attrition

Multiple opportunities and employee would also like to maximize his utility

EMPLOYMENT BOND

There are two main aspects of an EMPLOYMENT BOND

Time/Duration Amount to be paid
Compensation clauses revolve around these
 Illustrative scenarios and remedies

Sr. No Time/Duration Amount Legality Consequence

Section 74 penalty Pay the due subject to reasonable

1 Fixed Not specified
stipulated compensation

Section 74 penalty Pay the due subject to reasonable

2 Fixed Fixed
stipulated compensation

Not specified
but project Forced labour not a valid bond - can be
3 Article 23 is violated
critical - special considered an offence
fixed period

Employed for
4 Fixed duration t @ salary Article 23 violated Forced labour considered as an offence
s pm, return t*s

Section 73
Loss l which Very weak bond difficult to enforce
5 Fixed employer has to prove
occurs to be paid difficult to estimate accurately the loss
extent of loss

Stipulated Pay the due subject to reasonable

6 Fixed Section 74 -
period compensation

Sr. No Time/Duration Amount Legality Consequence

Prior deposit d with

Stipulated Reasonable amount to be deducted and
7 a bank, contract Section 74 attracted
period rest returned
broken forfeit d

Relatively fool proof actual training

Stipulated Training expense t expense has to be mentioned. If found
8 Section 74 attracted
period needs to be given less, employee pays that amount instead
of t
 Time/Duratio
Sr. No Amount Legality Consequence
n

9 Fixed
Valid so long as at
Employee may be asked to return the
employees discretion.
Foreign bond fb money failing which would amount to
Employee liable to pay
unjust enrichment
the required expense

Article 23 violated,
Non-release of
Section 15, 19 and Not a valid bond offence is committed
10 Fixed personal
Section 75 of Indian or void contract citing coercion.
documents
Contract Act

Employment Bond

Is perfectly legalconditions apply

Governed by the Indian Contract Act
Suggested to use bond wisely within the ambit to flaw
to the advantage of the firm

Session learning summarized

What is employment bond

Benefits of using a bond retention, prevent attrition

Some illustrative scenarios of the usage of a Bond

Various legal provisions and consequences surrounding the bond

Session 6
Session learning objectives
See a practical application of usage of the Employment Bond through a case study
Understand the conditions under which the Bond is being used from the perspective of the employer
Validity of the employment bond

Case facts
H Employment Bond within the Airline industry.
H The two parties involved are Jan Peters a former Navy Pilot and Spanish Air Pilot, with Jet Airways undertook training and
soon within a year has joined Sahara Airlines (a rival of Jet Airways)
H Jet Airways thought of protecting his interest through the use of Employment Bond as huge costs incurred as training
expenses

Peculiarities of the Airline Industry

Fuel prices
Capital intensive industry
War/security issues
Heavily regulated
HR Challenges
Cost of labour as a part of operational expenses
 Pilots importance
Costs incurred in training the pilots and complying as per various regulations of DGCA
Co-Pilot Pilot10

The story
Jet Airways needed pilots for new series of aircrafts
Decided to recruit new pilots First officers and commanders
Train the man equip them with appropriate licenses
Induct them into the fold probation for some time then confirmation

Time line and specifics of Bond for Jan Peters

Interviewed on 28th April and given an employment same day
Some terms and conditions of the training bond were re-negotiated
Training in two stintsMay and September Successful training 12th October 98, confirmed on 6th February
1999.
Specifics of the Bond
Pre-Post
Training cost Rs. 15 L
Rs. 7.5 L as Bank Guarantee7 yrs.
Balance 7.5 lakh by way of deductions from monthly salary over a period of 3 years
Agree to serve for a period of 7 yrs.
Indemnity bond worth 7.5 lakh with two sureties, non-employment with competitor Rs. 2.5 L as demand draft
refundable deposit sans interest, retained by Jet Airways for 7 years. Deduction of Rs. 33, 000 for a period of 24
months. 7.92 L., non-refundable
Other clause related to non-employment with competitor and agreement to serve for a period of 7 years.

But....
Jan Peters resigned from his job on 6th December, 1999 and joined Sahara Airlines next day
Breach of psychological contract reduction of FDA Aggrieved because of change in seniority rules
Jet Airways claimed breach of contract and losses (8 more pilots had joined Sahara), disruptions in ops.
Filed for compensation of Rs. 6,94,000 + 24% rate of interest per year from date of filing the case until realization of the
same amount

Who breached the contract?

Jan Peters
Explicitly mentioned to serve Jet Airways for a period of 7 years
Joined the competitor Did not pay/serve the required notice
Unjust enrichment at the expense of employer (Jet Airways) Jet Airways
Reduced the FDA from 1500 to 500 (though rolled back on appeal)
Unilaterally change the rules for seniority
Changed the conditions of service and loan repayment
Eventually led to pilots leaving

Should Jan Peter be allowed to fly 737

View
Acquired the training and the skill at the companys expense and hence should use the skill only for the company
Would amount to unjust enrichment at the expense of the company
Can take up other jobs or fly other aircrafts.
Counter view
Though he can take other jobs, but what of the skill he acquired?

Yes he should be allowed to fly 737 series as he also has a family to look after....
The skill acquired proprietary in nature
is not Already collected Claimed Compensation justified
Sr no. Detail Amt. RS
1 Demand Draft 2,50,000
2 Indemnity Bond 7,50,000
3 Deduction from FDA 4,56,000
4 Total 14,56,000
 Rs.6,94,000 with 24% interest per year
Actual training cost incurred was @ Rs. 11,31,400
Well beyond reasonable compensation
Moreover it is clear that employer has actually given a loan for training

Jet Airways pleaded for injunction citing Public Interest

JA Argument
JA one of the first airliners to modify the fleet.
Tangible loss in terms of training expenses
Intangible loss in terms of disruptions of service and loss or reputation
They are well within their right to protect against unjust competition

Counter view
Modernising the fleet commercial interest
Use of negative covenant also indicates protection of self interest and commercial interest
Expense of training imparted was not from own investments, but it was also being recovered from employee

Enforcement
Injunction granted Jan cannot fly Boeing 737
Deter other pilots
 Peters
Non-Enforcement
JA claimed loss Cut corners to save on training expenses
Not a valid argument as DGCA regulates the requirements
However, this step would be against competition and against the free market
JP forced to do other jobs not using his complete skill/potential
There are a lot of pilots waiting to be recruited and trained and deployed. Also help competition Implication

Key takeaways
Application of a combination of illustrative scenarios prior deposit + indemnity bond + recovery from salary
Breach of contract
Basis of calculation of the compensation in case of breach of contract
Introduced the restrictive covenants

Session learning summarized

Application of the Bond Jan Peters Case
It was a combination of the illustrative scenarios.
Understood the conditions under which employer wished to use the Bond to his advantage
Based on the real-life case of Jet Airways vs Jan Peter Ravi Karnik,

Session 7

Company versus man legal view

Ram and Rams business are separateMallyas argument
Both exist as separate entities
Both can own properties
Difference comes in biological processes and the right to vote

Company versus man legal view

Ram and Rams business are separateMallyas argument
Both exist as separate entities
Both can own properties
Difference comes in biological processes and the right to vote

Types of properties
Real property Land, Real estate, Plant machinery Essentially ownership resulting from Cap Ex. Type of expenses
Personal propertySmall things of possessioncars, jewellery, tables, chairs, pens, erasers
Intellectual property the property as a result of thought/intellectual activity expression of thought

Intellectual Property can also be

Sold/bought
Licensed
Protection against theft/infringement
Insured
Example of IP music/Books/films, etc8

Protect
From a perspective
Dont protect
To protect or not to protect
purely economic
Protection has the risk of creating a monopoly
Leading to exploitationNot in the larger public interest
Man being a rational person would expect to maximize his utility
Which also implies that effort towards that activity, which has more return
Incentive/reward for their effort

So how to break this impasse IP laws to our rescue

IP laws try to balance the rewards for the effort of the owner vis--vis need for a competitive market place
Different types of IP
Trademarks/service mark
A word, name, symbol, or device used to indicate the source, quality and ownership of a product or service.
Trade mark generally used in the marketing of the product May also consist of slogans May also be renewed
subject to following certain procedures

Different types of IP
Copyright
Granted to authors of original works
Includes literary, dramatic, musical, artistic, photographs, designs also
Protection is available without registration.
Owner however has the rights to transfer the copyrights, reproduce the work. Expression
Patent Generally, for new invention New invention means any invention or technology hasnot been
anticipated by publication in any document
Frivolous invention -Intended use may cause serious harm to human, animal, plant life, health or environment
Used in the country elsewhere in the world
Public domain/state of art

Different types of IP
Exceptions or New form of old substance
Theories/ discovery of living- non living things
not much value addition 13

Different types of IP
Exceptions to Patent
Something obtained by cursory changes to the mixtures/constituents
Method of agriculture or horticulture
Any process for medicinal, surgical, curative, prophylactic diagnostic, therapeutic or other treatments for human
beings or for animals
Computer program or algorithms
An invention which in effect is traditional knowledge. Literary, musical, or artistic work (photographs, films)
 Different types of IP
Exceptions to Patent
Inventions related to atomic energy Presentation of information-Plants and animals in whole or any part there of

Different types of IP
Trade SecretsDefinition given by TRIPS
Information must be a secretnot easily available in the public domain
Having some commercial value Subject of reasonable steps by the owners to keep it secret Eg.The secret formulae of
Coke
Trademark Patent Copyright TradeSecret

Different types of IP
Trademark
Patent
Different types of IP

CopyrightDepending on the type of employment ER generally pans out within the

Trade Secret18
last two aspects and sometimes depending on the nature of employment, within the Patents also

Plagiarism vis--vis IP
Plagiarism ordinarily defined as:Practice of taking someone elses work or ideas and passing them off as ones own
Plagiarism has also led to the loss of jobs in many cases
Always better to cite/mention the appropriate reference for any data, picture, photograph which is not your own
19

Various bodies and agencies within IPR International Trademark AssociationINTA

NY based not for profit international association>5500 trademark owners and professionals in 190 countries.
WIPOWorld Intellectual Property Organization Agency of UN headquartered at Geneva
Promote and administer treaties related to IP Berne Convention
Created under Victor Hug of or protection of literary and artistic works 160membernations Principle of national
treatment India is a signatory to the convention

Various bodies/agencies/treaties within IPR Paris Convention

Trademark protection in foreign countries Based on principle of reciprocity Administered by WIPO
World Trade Organization-WTO Organized in 1995>150 members
Rules of trade and trade disputes
Agreement on Trade Related Aspects of Intellectual Property - TRIPS
Administered by WTO Minimum levels of protection
Computer program sunder copyright

New Challenges
Internet has sprung up new challenges on development and usage of a lot of things including softwares
Open Source (OS)a special case of copyright Licensees are free to use OS for any purpose
Make copies of OS and distribute them without royalties to a licensor
Also, free to create derivatives of OS
Free to access the source code and modify and develop something new

Some notable examples

Unix Apache The package R UCINET by Berkley
Where does ER come into all this
Tim Cook had promised to open R&D centre of Apple in Bangalore
Many e-commerce firms coming to India.
Many app based firms/start ups
Many cloud storage devices/apps/services
Stiff penalties for infringement of IP

This means
As an employer, clear policies with respect to piracy/licenses/email usage/sharing of materials etc.
Clear indication of ownership of IP with some sort of sharing
 As employee, careful usage of IT related infra

Recall Jan Peters Case

It is not that employers are totally powerless
This is where the use of restrictive covenants come into play.
Many employers make the employees sign confidentiality agreements/non-disclosure agreements/non-compete agreements

Session learning summarized

Understood the types of property
Intellectual property
Trademark Patent Copyright Trade secret
ER largely plays out within Patent, copyright, and Trade secret part.
RC is one of the weapons with Employer
10
Session learning objectives
Understandindetailtheemergenceofnewageworkspaces
Characteristicsofnewageworkspacesandthenewageworker
TransformationofIPasacommodity
SomepracticalexamplesofERscenarioswithrespecttotheIP

Recall Open source

Premisedonthebasisofintelligenceofcrowdis>intelligenceofanindividual
Aspectofintrinsicmotivationatworkratherthanexpectingmonetaryreturn
Essentiallynotabusinessmotivemoreofachallengingassignment

7The Genesis of such a revolution

Internet
SpecificallyWeb1.0Web2.0
Web2.0characterizedbyinteractivetwowaycommunication,moreaccessandwidereach
Usergeneratedcontentsocio-economictransformation

8Attributes of a city in information age

Attributesofacityininformationage
Transcendgeographicalboundaries
Interlinkedbyextensivelinks/networksofinformationandcommunicationtechnology
Suchcitiesactaslocationsforinformationexchangeandhubofnewknowledgeeconomy
Hubforinnovationandeaseofcustomizedservice
Eg.ofAmsterdamaswellasmoderndayLondon,Tokyo,andNewYork

11Implications for work/workers

Importancetobrainratherthanbrawn
Manipulationofinformationvis--vismanufacturingthings
Soideallymeansofproductionshiftstotheworker
Moreautonomydiscretionmorepowertotheworkers

12Implications for work/workers

Flexibleworking/workfromhome/virtualwork
Democratizationofworkforce
HumanResourceofafirmwouldbethemostvaluableasset
 E-lanceeconomy/individualizedeconomy/flexibleworkdesign/lessbureaucracies

13Welcome to the reality

Theotherside
MakingbusinessoutofIPRs
TheeconomicsofIPRs

14The economics of IPR

Business get screated
Simpledemandandsupplyatwork
Knowledgefirstowned(boughtasacommodity)
Thenrenderedscarce(bylimitingtheusage)
Priceistaken
Essentiallycapitalasoneofthemeansofproductionowns/purchases/deploysthebrain(asagainstthelabour)

16Therefore the Utopian ideas are replaced by

Labourultimatelyisaservicethatcanbebought
Evenknowledgeworkerissubordinatetotheemployercontrolledbythecapital
Thusnewagecitiesandworkersareprimesiteforre-commodification
Ownershipofmeansofproductionstillcontrolledbycapital

17The story of James Dyson

James Dyson
Inventedaspareforvacuumcleaner
Forcedtoabandonit
Becauseunabletoaffordtherenewalfeesforthepatent
Competitorsusingandreapingthebenefits

Company vs individual
Companiesabletoaffordthehighpricesoffilingandprotectingthepatent
Companyinvariablyhasaccesstomoreresourcescomparedtoanindividual(Exceptionsmaybethere)
Individualinventorsoftenlacktheexpertisetorunasuccessfulbusiness

18Ideas while at work Peter Taborsky

Peter Taborsky
Talented under grad student of chemistry and biology
Worked as lab assistant at the University of South Florida
Handling a sponsored project
By virtue of sponsored project company claimed all rights to the research outputs

The bone of contention

Peterdevelopedareusablesewagecleansersimilartocatlitter
Innovationinsewagetechnology
Claimedtohavedevelopeditseparately

19But
 Juryruledinfavourofthecompany
Argumentwasthatideaasaresultofworkingonthecurrentproject
NotonlywasPeterconvictedofcrime,buthisownnotebookswhichheusedtoworkwerealsoconfiscated
Genesisownershiptransferredaspercontract

20Closer home Cricket players refused to sign Contract

Thecontentsgistplayersaskedtorelinquishtheirintellectualpropertyandpersonalcommercialrights
TobeeligibletoplayinICCsponsoredtournaments
30daysbeforeandafter
Playersdecidednottosignthecontract

21So what is the way out

Employers
Gettheemployeestorelinquishtheintellectualpropertyrightsasapartoftheemploymentcontract
Claimownershipasemployerforallsortsofintellectualproperty
Maygivesomecredit/rewardsuitably
UseofRCcontestedinIndia
Gardenleave

Employees
InIndiasomeoptionsintermsofinvokingSection27ofICAagainstRCs
Dependsoncasetocasebasis
Readandclarifythetermsandconditionsofthecontract

22Thus
Eveninknowledgeeconomynothinghaschangedmuchfromtheviewpointoflabourandcapital
TheIPRregimehasbeenabletomaintainalienationaspect
AlthoughtherearefundamentaldifferencestoUSandEuropemarkets,TRIPSagreementtiltsthebalanceinfavourofUS

23 Session learning summarized

Understoodthepeculiaritiesofthenewageworkandtheworkspace
Inspiteofthepeculiaritiesrelationshipbetweentheworkerandthecapitalremainsthesame
TRIPShastiltedtheIPRrelateddebateinfavouroftheUS
IndiaRCorGardeningLeave

Employers
Gettheemployeestorelinquishtheintellectualpropertyrightsasapartoftheemploymentcontract
Claimownershipasemployerforallsortsofintellectualproperty
Maygivesomecredit/rewardsuitably
UseofRCcontestedinIndia
Gardenleave

Employees
InIndiasomeoptionsintermsofinvokingSection27ofICAagainstRCs
Dependsoncasetocasebasis
Readandclarifythetermsandconditionsofthecontract
22Thus
Eveninknowledgeeconomynothinghaschangedmuchfromtheviewpointoflabourandcapital
TheIPRregimehasbeenabletomaintainalienationaspect
AlthoughtherearefundamentaldifferencestoUSandEuropemarkets,TRIPSagreementtiltsthebalanceinfavourofUS

23 Session learning summarized

Understoodthepeculiaritiesofthenewageworkandtheworkspace
Inspiteofthepeculiaritiesrelationshipbetweentheworkerandthecapitalremainsthesame
TRIPShastiltedtheIPRrelateddebateinfavouroftheUS
IndiaRCorGardeningLeave

24
Re-cap Session 10

Understood the peculiarities of the new age work and the work space

In spite of the peculiarities relationship between the worker and the capital remains the same

TRIPS has tilted the IPR related debate in favour of the US

India options of RC or Gardening Leave

Delve into the peculiarities of IP regime

Understand the Restraint of trade
Some more examples of IP related conflicts around the world

IP related conflict and restraint of trade

Introduce the specific forms of RC

International agencies/treaties for IP

Agencies
WIPO World Intellectual Property Organization
Based at Geneva
World Trade Organization WTO
150 members

Treaties
Berne Convention
Paris Convention
Rome Convention
Trade Related Aspects of Intellectual Property TRIPS
Treaty signed in 1995 by members of WTO

Some interesting practical examples

 Amazon embroiled in a patent dispute

Niranjan Shankar Golikari case

Krishnan Murugai Case

Samsung Vs Apple patent infringement case

Restraint of trade

Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that
extent void
Exceptions

Master Servant Relationship versus Vendor supplier relation

Some interesting practical examples
Amazon embroiled in a patent dispute
Niranjan Shankar Golikari case
Krishnan Murugai Case
Samsung Vs Apple patent infringement case
Amazon embroiled in a patent dispute
Kivin Vergese former CEO of a company Brandport
Described as an innovator, inventor and entrepreneur.
He was initially recruited to work on some project later worked on project related to Kindle Fire
The invention essentially solved problem related to ad engagement which advertisers face online and offline
The question being decided was

In recognition of his invention KV was given a citation signed by Jeff Bezos and a piece of puzzle
Does a puzzle piece qualify as an adequate consideration for handing over an invention to the company?
The story

Kivin Vergese an innovator, inventor and an entrepreneur focusing on solutions related to online advertising
Sold off Brandport to Livegamer
Grappling with problems of online advertising
Presented his solution to Amazon on the first day of his employment

The story

In the hope that a separate business would be created

He would lead the project
Company did not heed to it
But still went ahead with patent filing and in return gave him a citation by JB + a puzzle piece

Re-cap Session 11
Two practical examples of IP related conflict between employer and employee
Provision related to restraint of trade as per Indian Contract Act
Peculiarities of Indian IPR regime vis--vis the TRIPS agreement
Introduced the specific forms of Restrictive Covenants

8/30/2016

1
Specific forms of Restrictive covenants
Non Disclosure Agreement
Non Compete Agreement
Non Solicitation Agreements
Such RCs applicable to middle to senior level of employees rather than entry or junior level
8/30/2016
2
Session 12
Session 12 learning objectives
Understand the specific forms of RC
The benefits and pitfalls of using RC
Certain peculiarities of RC
Enforceability of RC
Precautions to be taken by employer/employee/prospective employer

8/30/2016
3
Why use Restrictive Covenants
Protect business interest
Prevent loss of a key resource
Precaution against competition
Reduce vulnerability due to resignation of key employees
8/30/2016
4
What exactly are RCs
RCs are
Specific agreements/clauses within agreements
Between employees and employers
That outline specific restrictions on the employee
On the specific usage/dissemination of information
That employee became privy solely due to nature of work with the employer
8/30/2016
5
So where is the conflict
Employer
Wants to protect his business interest
Would like to have minimum competition
Control over important resources

Employee
Right to livelihood
Right to use the full array of knowledge/skill
Would also like to maximize economic gain
Right to pursue trade/occupation
8/30/2016
6
Complexities arise
No dedicated framework/law/provisions
Many conflicting rulings and judgements at both state and national level
Left to the judicial interpretation
8/30/2016
7
Specific types of RCs in use
Non Disclosure Agreement
Non Compete Agreement
Non Solicitation Agreements
8/30/2016
8
Non Disclosure Agreement (NDA)
NDA involves
Employee to take reasonable steps to maintain confidentiality of information
Not to disclose confidential information of company to any person, business unrelated to the company
Except under inevitable circumstances legally called upon
Recall Golikari case how it was inferred that confidential information was compromised
By extension refrain from carrying out similar nature of business also
8/30/2016
9
Non Disclosure Agreement (NDA)
NDA illustrative clause
He/she commits not to reveal any sort of knowledge/information/data/skill learnt as a result of the nature of job to be
utilized/deployed/be advantageous to other organizations
8/30/2016
10
Non Compete Agreement
Non Compete Agreement
A direct application of restraint of trade
Does not breach Article 19(1)(g) reasonable restrictions
Within the limitations of Section 27 of ICA too (though decided on case by case basis)
Explicitly forbid the employee or the ex-employee from joining the direct competitor
Recall Jan Peters Case, Corporate Bondage Case
8/30/2016
11
Non Compete Agreement
Illustrative clause
During this period you shall not accept employment similar in nature either full time or part time with any other employer
He/she is committing not to join or be associated with any organization in any manner whatsoever - where
knowledge/information/data/exposure, made available to him by the overseas opportunity is likely to be utilized/deployed/be
advantageous to him and/or to such organization.
8/30/2016
12
Non Solicitation Agreement
Non solicitation entails
Prevents an employee or a former employee from indulging in business with the companys employees or customers
Against the interest of the company
Recall Rocket Singh Salesman of the year movie
Solicitation question of fact
Current employees vis--vis former employees
8/30/2016
13
Non Solicitation Agreement
Non solicitation clause looks like
Both parties agree that for a period of 2 years from the date of termination of the agreement to which this appendix is
attached, including termination by either party with or without cause, either directly or indirectly solicit, induce or encourage
any employee(s) to terminate their employment with or to accept employment with any competitor, supplier or customer of the
other party, nor shall either party cooperate with any other in doing or attempting to do so.
Solicit/induce or encourage includes, but is not limited to (a) initiating communications with an employee relating to
possible employment or (b) offering bonuses or additional compensation to encourage employees to terminate their
employment with and accept employment with a competitor, supplier or customers (c) referring employees to personnel agents
employed by competitors, suppliers, or customers of the soliciting party
8/30/2016
14
Relevant legal provisions in India
Article 19 (1) (g)
Section 10, 27 & sections related to compensation of Indian Contract Act
Sections related to the Information Technology Act
Sections of Indian Penal Code
8/30/2016
16
Likely scenarios to use RC
RCs may be used
Limited use/narrow use/legitimate reason to use RC
Tailor made for the unique situations
Nature of job really involves dealing with sensitive/strategic/proprietary information
Not to be used for all levels but for middle or senior level employers
Enforceability however decided by the court may vary from case to case
8/30/2016
17
The twist of Termination
Protected employee
workman under IDA
State specific labour law
Follow proper procedures for termination
For termination due to misconduct also follow proper procedures adhere to principals of natural justice

Post termination
Indian Courts however sympathetic towards employee/ex-employee
Right to livelihood prevails over an agreement between an employer and employee(ex)
Generally courts do not allow post employment restrictions on account of unfairness in restraint of use of acquired skill
8/30/2016
18
Enforceability of RC
Restrictive covenants have limited utility
Various provisions of IPC and Information Technology Act, Contract Act and the Articles can be invoked
Conflicting judgements
Decided on case by case basis
8/30/2016

21
Session learning summarized
Session learning summarized
Specific forms of Restrictive Covenants
NCA/NDA/NSA
These too like training bond can be a sub contract or a separate clause within the employment agreement
Also saw illustrative clauses
Restrictions during employment is valid/Restrictions post employment decided on case to case basis
8/30/2016
22

Session 14
Learning objective
See the application of one of the restrictive covenants Non disclosure Agreement (NDA)
How the validity was determined/interpreted
Conditions of applicability of RC specifically NDA
Through the Priya Puri Vs American Express case
8/30/2016
3
Session 14
Learning objective
See the application of one of the restrictive covenants Non disclosure Agreement (NDA)
How the validity was determined/interpreted
Conditions of applicability of RC specifically NDA
Through the Priya Puri Vs American Express case
8/30/2016
3
Session 14
Learning objective
See the application of one of the restrictive covenants Non disclosure Agreement (NDA)
How the validity was determined/interpreted
Conditions of applicability of RC specifically NDA
Through the Priya Puri Vs American Express case
8/30/2016
3
The bone of contention
The information of customer details termed as trade secrets
Can the bank prevent customers from leaving them
Can the bank command ownership over the relationship of the executive with the customer
8/30/2016
5
The story
Priya Puri joined American Express credit card sales division, circa 2001
Aspiring young executive worked hard
Soon promoted as Relationship manager in the Wealth Management Division around 2003
8/30/2016
6
The arguements

Employer
Priya Puris exit may be a threat to the business
Confidentiality of customer data

Employee
Undue harassment
False baseless allegations
With a motto to force to remain in the job
Malafide intention of suppressing information
Good ratings consistently
The names of customers available in public domain
8/30/2016
9
The decision
It was decided in favour of Priya Puri
No injunction was given for lack of sufficient evidence
It was also concluded that just a customer list cannot be claimed as IP specifically Trade Secret or Copyright
8/30/2016
10
The logic for the decision
It was inferred that
Priya Puri had already resigned and post resignation demanded for the list of customers
It raises suspicion as to why the employee would cooperate given that it was already known that Priya Puri had resigned
Moreover if she had forced any junior employee to give the password then she could have compiled the list on her own
Customer has not signed any sort of exclusivity agreement with the bank free to bank with anyone
8/30/2016
11
The logic for the decision
It was inferred that
Consistently good ratings in previous appraisals
Some loopholes in the conduct of the inquiry/conference on 4th October
Priya Puri was performing well and hence it seems that she was already in possession of some sort of information, if so it
seems redundant that she would force someone to part with the same
Under plea of confidentiality bank cannot claim monopoly over customers/restrain the customers from banking with other
banks
8/30/2016
12
Key takeaways
Customer list cannot be claimed to be confidential/propietary information
Skills, aptitudes, manual/mental ability Master (employer) cannot claim control/ownership
Restraint of trade after seizure of master-servant relationship is not valid subject to test of reasonableness
Restraint during employment is valid
8/30/2016
13
Session learning summarized
Session learnings:
Restrictions during employment are valid
Restrictions post employment need to be deliberated upon for restraint of trade in this case it was construed as restraint of
trade
Employer cannot seek for restraint/application of non disclosure for the general knowledge gained during employment
Customer lists/details/relationship built customers cannot be brought under intellectual properties
Common information also cannot be considered as trade secret
8/30/2016
14

In Priya Puri Case we understood application of NDA

Restrictions during employment are valid
Restrictions post employment need to be deliberated upon for restraint of trade in this case it was construed as restraint of
trade
Employer cannot seek for restraint/application of non disclosure for the general knowledge gained during employment
Customer lists/details/relationship built customers cannot be brought under intellectual properties
Common information also cannot be considered as trade secret

Session 15
Session Learning Objectives:

The application of Non Solicitation Agreement through the case of Wipro Vs Beckman Coulter
Conditions under which Non Solicitation may be valid
Understand how Beckman Coulter exploited the loophole within the NSA
How the validity was interpreted in the case of Wipro vs Beckman Coulter
Case facts
Wipro Biomed Biomedical Division of Wipro
Employing 80 people across 7 offices wide network
Specialized, trained, competent technical and marketing executives providing consulting, installation and calibration,
maintenance and back up services of biomedical equiments
Case fact
Beckman Coulter leading US MNC
Biomedical industry comprehensive product portfolios
Catered to pharma, biotech, and educational institutes
Wipro Biomed was the soul distributor of Beckman Coulter in India close to 17 years

The different agreements signed

Different agreements signed between Wipro and Beckman Coulter

Exclusivity Agreement -deal only with one another

Canvassing Representative Agreement sets out the rights and duties of both parties - in this case renewed from time to
time
Confidentiality Agreement
Non solicitation as a part of CRA In the event of termination of CRA neither Wipro nor Beckman Coulter should solicit
directly or indirectly or induce or encourage employees of partner organizations
The bone of contention
Leadership change at Beckman Coulter
October 2005 formal intimation of non renewal of CRA to Wipro
Deciding to enter Indian markets on their own
Advertisement to this effect which caused a mass exit from Wipro is it violation of NSA which was in force
Restraining vis--vis solicitation

The Argument
Wipro Beckman Coulter
 Soul distributor of Beckman Amongst other set of arguments
Coulter equipment also given
The advertisement released in General advertisement and
leading national dailies violate cannot be construed as
the NSA solicitation
experience of working with or Any restraint of employment
having handled Beckman Coulter would amount to violation of
products and/or similar products Section 27
would be a distinct advantage

The decision
The wordings of the advertisement definitely amount to solicitation
However in this case Beckman Coulter was forbidden from taking out further such advertisements or using other such
means to lure the employees of Wipro
The employees who had resigned from Wipro however were free to join Beckman Coulter
It was also referred to Arbitration
The Rationale
The rationale for the decision
The major difference stems from the fact that two firms are involved in the contract and restriction is being imposed on the
firms and not on employees
Thus question of restraint of trade does not arise unless Wipro had signed an agreement to that effect with their employees
The right for the employee to seek better opportunities cannot be curtailed
Both employer and employee have equal rights to terminate the contract

The Rationale
The rationale for the decision

Restricting the employee from joining any past, present or prospective customer is void and comes under purview of restraint
of trade
Employer cannot prevent his employee to join other firms on the grounds of competition compared to that of the vendor
purchaser
-in the latter case it is assumed that both the parties are on equal footing
Restrictions during the employment are valid, but restrictions post employment are not valid

Takeaways

The key learnings from this case:

Restrictive covenants during the employment/term of the contract are perfectly valid and do not violate Section 27
Restrictions post employment are not valid
Unlike in other settings, there is no provision of partial restraint in India
Non solicitation agreements or clauses per se are not rendered invalid

We understood through this case

NSA or such clauses per se are valid

Question of Partial restraint/partial restriction is not considered in India

Restraint during employment/enforcement of contract is perfectly valid
Restraint post employment generally is not considered valid as far as master servant relationship is considered
Difference between restraint and solicitation

Re-Cap Session 15
We understood through the Wipro Vs Beckman case
NSA or such clauses per se are valid
Question of Partial restraint/partial restriction is not considered in India
Restraint during employment/enforcement of contract is perfectly valid
Restraint post employment generally is not considered valid as far as master servant relationship is considered
Difference between restraint and solicitation
Session learning Objectives
 The focus would be to look at alternatives from the employers perspective
Within the legal framework, can the employer do anything at all
Can Garden Leave be considered a panacea for the employers
Applicability of Garden Leaves in India

Peculiarities of modern workforce

Modern day workforce characteristics

Importance to brain rather than brawn
Flexible working/work from home/virtual work
E-lance economy/individualized economy/flexible work design/less bureaucracies
Making business out of IPRs
Essentially capital as one of the means of production owns/purchases/deploys the brain (as against the labour)
What are some of the possible way out

Restrictive Covenants
X Non Disclosure Agreement
X Non Compete Agreement
X Non Solicitation Agreement
Restriction during employment valid
Restriction post employment
Deliberated on case to case basis
Generally can be taken as void
The shortcomings of RCs
Limitations of The three major forms of RCs we have discussed from the perspective of employer
Variation in enforceability Pre, post and during employment
The logic and decisions vary from case to case creating ambiguity
Uncertainty in the applicability
No question of partial restriction within the Indian framework

Relatively new concept

Relatively new mechanism/practice
Not tested much in the corporate world
A variation of the Restrictive Covenant
Also known as Garden Leave
What is Garden Leave
Garden Leave Explained
A variation of the restrictive covenant
The employee has to give/serve a sufficiently long notice period to the employer
Before terminating the employment/master-servant relationship
No work
Full salaries and benefits paid to the employee during this duration
The Logic
The logic behind the garden leave
The notice period which is sufficiently long
The employer promises to pay the full salary and benefits
The employee is not supposed to work, but instead sit at home and tend to garden
Trying to keep the employee away from work leading to some sort of redundancy in the knowledge/information that the
employee has
Master servant relationship is still intact
Garden Leave - History
Historical development
An English concept
English labour law philosophy more based on master-servant relationship
Right from medieval times the focus was on honouring the commitment no matter the consequences
Recent change in philosophy
Evening Std. Co. Vs Henderson can be considered as the case that led to the rise of the concept of Garden Leave
The story
 The background of the Henderson Case
Evening Standard a reputed evening newspaper in London
Peter Henderson production manager
Robert Maxwell another famed publisher intended to start a rival newspaper
Recruited Henderson
The contract contained provision of a 12 month notice period Henderson wanted to leave after serving 2 month notice
The decision
Lower court rejected but the appeal for injunction was granted
Evening standard argued that though Henderson wanted to terminate the contract, they were not ready for the same
They agreed however to pay the full salary and benefits to him for the said period.
They also agreed not to pursue charges/damages for not carrying out the required duties during this period
Provisions of Garden Leave was examined from the view point of restraint of trade Section 27
The story

Suprit Roy employed by VFS as senior general manager

Subsequently he was transferred to Visa Facilitation Services Division as General Manage

Terms and conditions of services also changed employment contract also changed

Changes to the contract

Original Change

The employment could be The employee not to participate

terminated by either side by giving one months commence in similar nature of business notice period or salary in
lieu of that during employment
For a period of two years after
Some other changes which were
similar to NDA/NCA
Subsequently provision of garden
leave was introduced

The provision of Garden Leave

The clause related to Garden Leave
The Company reserves the right to require you to remain away from work/employment for a period of 3 (three) months after
termination or resignation of your services with the company. You shall agree to comply with all conditions that may be laid
down by the Company at the time of such resignation or termination. The Garden Leave period shall commence after you have
served the notice period and have ceased to be on the rolls on the Company.
The provision of Garden Leave
The clause related to Garden Leave

You shall be bound and undertake that you will not directly or indirectly, whether through partnership or as a shareholder,
joint venture partner, collaborator, employee, consultant or agent or in any other manner whatsoever, whether for profit or
otherwise carry on any business, which competes directly or indirectly with the whole or any part of the business of visa
processing services or having/conducting business similar to the business conducted by the company for a period of 3(three)
months after serving the notice period and ceasing to be an employee of the Company.
The provision of Garden Leave
The clause related to Garden Leave
You shall also be bound to comply with the conditions of Non Compete and Non Solicitation as set out in the terms and
conditions. The Company shall pay you compensation which shall be equal to 3 (three) month's remuneration last drawn by
you at the time of your termination or resignation. Please note that the company shall apply this clause at its sole discretion and
you shall not claim it as a right.
The decision and logic
Decision Logic

VFS cannot prevent Suprit Roy Garden Leave Clause was to be

from leaving and joining the applicable post employment
other company either termination or resignation
The provisions of Garden Leave Although wages paid cannot be enforced in this case
Master service relation has been disrupted
Restrictions post employment violaiton of Sec 27 ICA
Limitations/Questions that can be raised
 Garden leave can be questioned on
Ability to earn a living Article 19(1)(g)
Inherently anti-competitive there is a chance that monopolies may be created
Forcing an employee to stay against the will may also be construed as forced labour
The long notice period that is needed to be served may be considered unreasonable
Two sides of Garden Leave
Arguments for
Master-servant relation still intact employer can still tell employee what to do and what not to do
Not complying with employers instructions can also be construed as insubordination and disciplinary action may be
initiated
The earning is still not compromised
Arguments Against
Ability to earn a living Article 19(1)(g)
Inherently anti-competitive monopolies may be created
Forcing an employee to stay against the will forced labour
The long notice period that is needed to be served unreasonable
Session Learning Summarized
Employer after all is not totally defenseless
Garden Leave seems to be emerging as a new tool with the employer
Garden Leave force the employee to serve the minimum notice period sans the work that he /she performs
With the increasing applicability of garden leave it also will be increasingly challenged so far only one case in India
May be applicable only for key employees
Re-Cap Session 16

Employer after all is not totally defenseless

Garden Leave seems to be emerging as a new tool with the employer

Garden Leave force the employee to serve the minimum notice period sans the work that he /she performs
With the increasing applicability of garden leave it also will be increasingly challenged so far only one case in India
May be applicable only for key employees
Session 17
Session Learning Objectives:

The application of Non Compete Agreement through the case of Pepsi Vs Coke
Conditions under which Non Compete Agreement
Understand applicability of NCA in India
How the validity was interpreted in this case and some other learnings
Case facts
Pepsi & Coke
Both are giants in the soft drink industry Arch rivals
The cola industry needs a sensitive and responsive supply chain
A dedicated sales team forms the backbone of the firms
It takes time to develop the various contacts constant servicing/interaction needed

Case facts
In this case

A certain employee of Pepsi resigned and joined Coke at substantially higher emoluments
Subsequently many employees left Pepsi to join Coke
Few of them withdrew their acceptance and decided to stay with Pepsi
Pepsi did not initiate any action against them
However Pepsi wanted to prevent the others from joining Coke
The different agreements signed
Different provisions of the employment contract signed by employees of Pepsi
Three months notice period for termination of employment
Confidentiality Agreement
 Non Compete Restraining the employees from accepting employment with competitor for a period of 12 months after
ending their employment with Pepsi
The story

Pepsi Coke
Built their network from scratch Entered Indian market through
the acquisition route
Huge investments incurred to set
up a reliable supply chain Coke acquired Parle
network
Developed a strong technical, finance, production and sales team
The bone of contention
The sales team leaving enmasse can they be prevented from joining Coke
Restraining via non compete valid?
Can an employee be prevented from taking up jobs with better prospects under the garb of protection against unfair
competition?
The Argument
Pepsi
Accused Coke of carrying out the poaching with a Malefide intention
Induced key marketing personnel to terminate their contract with Pepsi
Coke interfering with Pepsis business
Coke
False allegations
Many employees had not directly joined Coke but had worked elsewhere
Acted in interest of their business
Employees have a right to better their prospects and service conditions
Offers made based on merit
The decision
The court did not grant injunction against the employees who wanted to join Coke
Elaborated on competition and its importance for trade
The actions/deeds of Coke were not with Malefide intentions rather with the aim of driving the competitor (Pepsi) out of
business
Coke was furthering their business interest which is again legal
Post employment restrictions are not legal

The Rationale
The rationale for the decision
Since post employment restrictions are void and in violation of Section 27 of the Indian Contract Act, the Court cannot give
Injunction against something prohibited by law
Mr. Bose an independent consultant running a placement agency and hence cannot be said that he has been instigated by
Coke
Employees have a right to seek better opportunities and cannot be curtailed by an injunction
The Rationale
The rationale for the decision
Courts cannot curtail the freedom of employees to better their prospects and service conditions
Employees are well within their rights to terminate their employment which the courts cannot restrict/curtail
Courts cannot step in matters pertaining to competition
Pepsi too had employed employees who were earlier employed with other MNCs and hence now Pepsi cannot claim relief
and plead that their employees not be allowed to join Coke or any other such competitor
Takeaways
The key learnings from this case:
Restrictive covenants during the employment/term of the contract are perfectly valid and do not violate Section 27
Restrictions post employment are not valid
Employees have a right to terminate their employment as per the provisions of the contract similar to that of the employer
Employees also have a right to avail better prospects and better service conditions
Session Learning Summarized
We understood through this case
Restraint during employment valid
Restrictions post employment are void
Difference between termination of contract vis--vis breach of contract
 Both parties have equal right to terminate the contract as specified

Re-Cap Session 17
In Pepsi Vs Coke we understood that
Restrictions during employment are valid
Restrictions post employment need to be deliberated upon for restraint of trade in this case it was construed as restraint of
trade
No provision of partial restraint in India
Non Compete Agreement stand alone may not be very useful inherent problems of clearly defining the competition
Session 18
Session Learning Objectives:
Some international perspectives of Employment Relations
Revisit the new knowledge based economy
Revisit the redundancy of geographical boundaries in the modern day globalized economy
MNCs and the rights of the employees Need for global labour standards
Some important changes to economy
Evident changes to the economy
Demographic change Increase of women in the workforce
Shift from manufacturing to services economy
Brawn to brain
Reduction of government owned firms and increase of private sector
Rapid decline in collectivization around the world
An increasing trend of self employment
Some statistics

Some more note worthy information

Labour participation rate at 56 per cent

Nearly 92 per cent engaged in informal sector
Nearly 30 per cent are daily wagers
Over half the workers are self employed
Unemployment rate as a statistic is low about 2.7 per cent
Wage gap between agri and non agri stands at 1:6
The shift summarized
The paradigm shift can be summarized as
Rise in temporary workforce/self employed workforce reduced importance of employment relations
Increase of flexible work greater cooperation between workers and employers
Importance of brain rather than brawn knowledge economy
Seeming shift from conflict based to cooperation based economy
The bane of self employment
The good
Efficient/convenient for employers
Flexibility of work
Autonomy of work
Lesser control and supervision
Eg. business models of aggregators like ola, uber
The ugly
Missing out on employment benefits like pf, gratuity, medical benefits, insurance benefits
Paid holidays, sickness pay and redundancy pay
False self employment lack of better opportunities
Might be a consequence of lack of adequate alternatives
Flexible work/workers
The good
From employers perspective efficient arrangement
Ease of hire and fire project based arrangements
No liability per se of the labour and less impact on the balance sheet
The ugly
Exploitation of labour
 Agency temps lack of better working conditions
Effect of economic exigency shifted from employer to employee now
0 protection against vagaries countries like India which have limited Social Security

View
Assumption of more cooperative relations between employer and employee
More autonomy/flexibility
Importance for brain rather than brawn
Counter view
knowledge work is a misnomer
much of the so called work is mundane
The work more often than not lacks discretion and complex analysis
The fine line of wage work
knowledge work has not eliminated low skilled jobs

Manifestations of the change

Effects of economic changes on labour/employment
Increased temporary workforce/informal workforce
Exploitative working conditions
Migration (both geographic as well as within sectors)
Increase in the precarious work
Social issues of self employment/flexible employment

Indias magical growth

Among other things liberalization can be attributed to
Wage arbitrage opportunities
Time difference advantage for the IT/ITeS industries
Relatively skilled labour
Fair command over English language
Liberalization opened the flood gates of globalization
Globalization in perspective
Evidence of globalization
Interconnected financial markets
Growing international trade
Increased FDI
Growing power and influence of MNCs
Resulting migration
Effects
Primacy to free markets
Call for flexibility minimal interference of state and regulatory authorities
Increased competition
Increased efficiency

So What
Pressures of globalization leads to
Deregulation greater flexibility
Weakened trade unions and employment relations
Job insecurity, rise of precarious work
Lead to migration
Possible deterioration in quality of work
Unions being national actors are not able to face the onslaught unless some international agency supports them

The converging divergence

Convergence
Globalization acting as a force which is creating a uniformity in practices
Eg. Cost of McD burger/Dominoes Pizza
The best practices are adopted by MNCs in the subsidiaries too
Divergence
The respective national governments still have a sufficient say in the policy level aspects
There is a social structure and the cultural aspect which creates a major difference
 VoC in spite of its critiques is a good example
Race to bottom Global Labour Standards
Labour/trade
unions
Supra national bodies
Respective
nations

Global labour standards

Limited effectiveness of such bodies
Trade treaties formed within specific blocks
Many countries do not agree to ratify the conventions thus they find an escape route
The supra national bodies per se are very powerless as they cannot do much against the nations that fail on compliance and
adherence to international accepted standards
So the way out Code of conduct
Code of conduct
The MNCs forced to ensure adherence to minimum labour standards through code of conduct
Eg. Nike is a member of FLA Fair Labour Association which includes Puma and Reebok too
The UK counter part is ETI- Ethical Trading Initiative
In India the Automobile companies ensure that the ancillaries adhere to the rules
The code of conduct stems from need to protect reputation and image

Code of conduct the other side

The MNCs forced to ensure adherence to minimum labour standards through code of conduct
Limited effectiveness as it is voluntary
Many companies forced to follow due to external pressures rather than genuine concern
Auditing and monitoring practices shortcomings in that
There is a danger of social desirability connivance of the manager of supplier and the MNC
Possible Work intensification
Some noteworthy contemporary praxis
Some of the contemporary practices which are likely to affect the ER
Holacracy
Virtual employment
Experimenting with reduced working hours example of Scandinavian countries trying out 30 hour working
Session Learning Summarize We understood
Employment relations in a broader perspective
Globalization and its effects
The changed form of economy and its likely consequences on the employment relations
The need for a global labour standard and the code of conduct
The emerging practices which may transform our views about traditional emplo