Employment in Financial Services
Contributing Editor
In a rapidly evolving regulatory landscape, employers in the financial services sector must ensure they are fully compliant with local employment rules and procedures. Helping to mitigate risk, IEL’s guide provides clear answers to the key issues facing employers in the sector
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13. Are there any particular rules that apply in relation to the use of post-termination restrictive covenants for employees in the financial services sector?
13. Are there any particular rules that apply in relation to the use of post-termination restrictive covenants for employees in the financial services sector?
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India
India
- at AZB & Partners
Post-termination non-competes are not enforceable, as they are treated as a restraint of trade. Courts have given prevalence to the livelihood of the employee over the employer’s interests. However, a reasonable non-solicit restriction may be enforceable in India.[1]
Employees in financial services are also bound by post-employment (for both resignation and retirement) obligations.[2] RBI employees[3] who cease to be in service should not accept or undertake “commercial employment”[4] for one year from the date on which they cease to be in service without the prior approval of the concerned authority. For SEBI employees[5], the cooling-off period is also one year. “Commercial employment”[6] broadly includes employment in any company or setting up their own practice without having professional qualifications and relying only on official experience. Such engagement may bestow an unfair advantage upon clients by virtue of the ex-employees’ prior experience at the organisation. The grant of prior approval by the concerned authority is dependent on whether there is any ensuing conflict of interest from such engagement.
[1] Employment Contracts in India: Enforceability of Restrictive Covenants, available at <https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Employment_Contracts_in_India.pdf>
[2] Section 55, SEBI (Employees’ Service) Regulations 2001.
[3] General Administration Manual, RBI, available at <https://rbidocs.rbi.org.in/rdocs/content/pdfs/71073.pdf>
[4] Section 2, Regulation 37A, RBI Staff Regulations, 1948.
[5] Section 55(3), SEBI (Employees’ Service) Regulations 2001.
[6] Section 55(2), SEBI (Employees’ Service) Regulations 2001; Section 2, Regulation 37A, RBI Staff Regulations, 1948.
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Tortoro Madureira & Ragazzi Advogados
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DS Avocats
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Kliemt.HR Lawyers
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Morgan Lewis & Bockius
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AZB & Partners
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Maples Group
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Cains
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Marván, González Graf y González Larrazolo
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Lexence
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TSMP Law Corporation
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Walder Wyss
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Morgan Lewis & Bockius
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Morgan Lewis & Bockius
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Morgan Lewis & Bockius