Manoj Kohli was CEO and executive director of Escotel, the Escorts group's cellular service provider. Kohli quit and joined Bharti Televentures, a rival, as Joint President, Mobility Group. Market watchers saw this switch as something of a recruitment coup. And so it probably was.

Betrayal, cried his former employer. The Escorts Group Chairman, Rajan Nanda, was peeved enough to file a legal case against Kohli, citing a 'non-competing' clause in Kohli's employment agreement that barred him from joining a competing telecom company for three years.

Raj Nayak was the ad sales chief in India of News Corp's Star Network, playing a key role in getting commercials for Star News. Nayak quit and joined NDTV, the exclusive content supplier to the TV channel-which was preparing to go its own way by launching a couple of rival news channels on March 31, 2003. Market watchers saw this switch as something of a preference assertion. And so it probably was.

Betrayal, cried Star. The News Corp set-up was incensed enough to sue Raj Nayak and NDTV, alleging a violation of contractual obligations.

There you have it. Two high-profile cases. And two much-relieved employees; both Kohli and Nayak are out of the dock, though the former still has a division bench appeal by Escorts to contend with. None of the parties involved in the two litigations, contacted by BT, was willing to say anything.

It is, however, a single issue.

Clause-—What Clause?

Till recently, nobody had heard of non-competing clauses. Now that they have-they have a habit of sneaking into job contracts-people tend to avoid getting into the gory details. Often, that headache is left to recruiters. Says Ajit Isaac, CEO, People One Consulting, "It is the recruiter who has to do the necessary due diligence, and if there is some problem, he hasn't done his job."

So what are these clauses anyway? The details are too steeped in legalese to even try reproducing here. But in sum, the clauses typically demand that the employee promises not to join a competing organisation in the same industry for a specified period (say six months, a year, or more) in case he or she quits. Such clauses are most prevalent in industries that are cola-like: two or three fiercely competitive players that are bitterly obsessed with each other (and with secrecy). Crossing over of key personnel is viewed in near-apocalyptic terms.

The big fear is that the enemy camp will get hold of strategic information, tricks of the trade and the like-the 'source code' for success. A Rajeev Karwal shifting from LG Electronics to Philips, for example, could take LG's marketing success formula away and use it to strategic advantage for the rival. Likewise, a Gaurav Duggal, a Pepsi planner, crossing over to Coca-Cola could result in substantial loss of data.

Besides, reason some clause-writers, it's only fair that an employee adheres to the terms agreed upon. A company empowers employees with sensitive information only on the reassurance of commitment.

Of Human Bondage

Ordinary people, by and large, loathe the very notion of 'bondage' -in whatever form. For obvious reasons. Companies retain the right to sack high-level employees (as per contract), and so employees should reserve the right to walk out too, and do whatever they so choose.

As for the info empowerment argument, it can be countered with the reasoning that whiz performers add as much (or more) to a company's brainware as they gain. Besides, it's not clear whether such clauses actually work as intended. The Kohli and Nayak cases suggest not. Shrewd recruiters are adept at spotting loopholes. The new recruit could be absorbed in a non-competing field, temporarily, for example. As the man in charge of the eastern and western regions at Bharti, Kohli can plausibly claim not to be competing with Escotel.

Many firms believe that it's best to stick to the good old-fashioned ways to retain people. Y.V. Verma, Vice President (HR), LG, does not see non-competing clauses as productive, for they have little bearing on "the companies' future".

Then, there's Pepsi's experience to consider. After Pepsi lost 14 people of its Kanpur team to Coca-Cola India in 1998, the company wanted all manager-level employees to sign non-competing clauses. Most, however, refused to sign on. Pepsi, which refused to discuss this episode with BT, got seven people back, but not through legal means. "Loyalty," says an ex-Pepsi employee, "doesn't come from contracts." It's an emotion thing.

Are hr departments failing somewhere? Possibly, suggests Rahul Taneja, Vice President, ConsIndia, a recruiter. "People look at immediate requirements," he sighs, "and there is no long-term vision." So when a problem arises, someone dusts off an old piece of paperwork to wave in the employee's face. This kind of thing could leave the employee all the more miffed.

Embittered exits often end up encouraging the 'breakaway' mindset, where the slighted departee turns hellbent on inflicting damage on his former employer.

Some time back, Vasanth Nangia quit Titan's jewellery venture, Tanishq, along with five other executives, to start Oyzterbay, a similar venture. Once established, a brand is always much larger than its contributing individuals. Yet, Tanishq decided to sue Nangia for alleged violation of an allegiance clause signed in 1997. The case gave Oyzterbay just the publicity it needed.

From a PR perspective, these clauses can backfire. Tying people down sounds curmudgeonly in a world where people ought to be free to follow their hearts.

Moreover, as Anita Ramachandran, Chief Executive Officer of Cerebrus Consulting, sums up, "You can't do someone out of a livelihood."