Enforceability of Restrictive Covenants in Employment Contracts: Comparing India and Indonesia

Main Article Content

Shrirang Ashtaputre
Manasi Joglekar
Asyaffa Ridzqi Amandha


In contemporary times, one of the fundamentals that bind and guide any professional relationship is a contract and throughout the negotiations, the parties to it try to assert their interests for ensuring gains. In this process, quite often, several clauses are inserted for ensuring greater exploitation without greater investments and this is witnessed quite often in India and Indonesia, especially in employer-employee contracts. Referred to as restrictive covenants, the Indian Courts have often interpreted the Indian Contract Act 1872 in a progressive fashion, duly preventing the employee from being reduced to a bonded labourer, on numerous occasions. But this does not mean that in all the situations, such covenants are impermissible—the extent to which an employer can restrict the employee for maintaining confidentiality andprotecting trade secrets among other things is what is largely determined by the Courts. Furthermore, in Indonesian context, the contract law stipulated not only in Article 1313 Indonesian Civil Code, but also in various acts such as Indonesian Emplopyment Act 2003 and Government Regulation No. 35 of 2021 concerning Work Agreements for Certain Time, Outsourcing, Working Time and Rest Time, and Termination of Employment. Discussing and comparing the stance of the Indian Judiciary and Indonesian contract system on such restrictive covenants, the Authors, through the medium of this paper seek to shed light on the extent to which they are enforceable and, in the circumstances, where they are valid. In a nutshell, the Authors seek to warn the employers to refrain from engaging in such practices which are likely to harm the principles of humanism enshrined in the Constitution and alert the employee of the scope of their duties towards the employer. 

Article Details

How to Cite
Ashtaputre, S., Joglekar, M., & Amandha, A. R. (2022). Enforceability of Restrictive Covenants in Employment Contracts: Comparing India and Indonesia. Law Research Review Quarterly, 8(3), 403-426. https://doi.org/10.15294/lrrq.v8i3.57644


Departemen Pendidikan Nasional. (2005). Kamus Besar Ikthasar Indonesi Edisi Ketiga. Balai Pustaka.

Haq, M., & Utama, A. S. (2021). Penyuluhan Hukum Mengenai Hak-Hak Tenaga Kerja Kontrak Kepada Anggota Konfederasi Serikat Buruh Sejahtera Indonesia (K- SBSI) Provinsi Riau. Jurnal Pengabdian Mitra Farmasi, 1(1).

Karma Resen, M. G. S. (2015). INOVASI DAERAH (Refleksi dan Pengaturan Inovasi Daerah di Indonesia). Jurnal Magister Hukum Udayana (Udayana Master Law Journal), 4(4). https://doi.org/10.24843/jmhu.2015.v04.i04.p07

M Husni. (2009). Tinjauan Umum Mengenai Kontrak. Sinar Grafika.

Purwahid Patrik. (1988). Hukum Perdata II, Perikatan yang Lahir dari Perjanjian dan Undang-undang. FH Undip.

Salim MS. (2008). Hukum Kontrak, Teori & Tekriik Penyusunan Kontrak. Sinar Grafika.

Sudarsono. (2007). Kamus Hukum. Rineka Cipta.

Tolla, D. G. J., & Widyastuti, E. (2020). Welfare State Untuk Membatasi Asas Kebebasan Berkontrak Dalam Perjanjian. Sultra Research of Law.

Utrecht. (1986). Pengantar Hukum Administrasi Negara. Pustaka Tinda Emas.

W Riawan Tjandra. (2008). Hukum Adminsitrasi Negara. Universitas Atmajaya Press.

Wildan, M. (2017). Perlindungan Hukum Tenaga Kerja Kontrak Dalam Perjanjian Kerja Waktu Tertentu Berdasarkan Undang-Undang No. 13 Tahun 2003 Tentang Ketenagakerjaan. Jurnal Hukum, 12(4).

Yudi Latif. (2015). Negara Paripurna: Historisitas, Rasionalitas, dan Aktualitas Pancasila. PT. Gramedia Pustaka Utama.

Cases and Legal Documents

Ambiance India Pvt. Ltd. v. Naveen Jain, 122(2005) DLT421.

American Express Bank Ltd. v. Priya Puri, 2006 SCC OnLine Del 638.

Anindya Mukherjee v. Clean Coats Pvt. Ltd., 2011 (2) ARB LR 241(Bom).

Arvinder Singh v. Lal Pathlabs (P) Ltd., 2015 SCC OnLine Del 8337.

Bhavesh J. Bhatt v. Cyrus N. Baxter, 1991 Mh.L.J. 231.

Charlesworth v Macdonald, (1898) I.L.R. 23 Bom

City Ice and Cold Storage Co. v. Kinnee, 140 Wash.381, 249 P.782.

Danieli Corus BV v. SAIL, 2017 SCC OnLine Del 12327.

Diljeet Titus v. Mr. Alfred A. Adebare and Others, 2006 (32) PTC 609 Del.

Diodes Incorporated v. Gustav Franzen, (960 Cal. App. 2nd 244.

Eli Research India Pvt. Ltd. v. Deepak Gupta, 2017 SCC Online Del 8403.

Faccenda Chicken Ltd v. Fowler, (1986) 1 All ER 617.

Gujarat Bottling Co. Ltd. v. Coca Cola Co., (1995) 5 SCC 545.

Hukmi Chand v. Jaipur Ice & Oil Mills Co., 1980 SCC OnLine Raj 58.

Jet Airways (I) Ltd. v. Jan Peter Ravi Karnik,2000 (4) BomCR 487.

John Richard Brady and Ors. v. Chemical Process Equipments P. Ltd and Anr., MANU/DE/0586/1987.

Lansing Linde Ltd v. Kerr, (1991) 1 All E.R.418.

LE Passage to India Tours & Travels Pvt. Ltd v. Deepak Bhatnagar, 209(2014) DLT 554.

M/s FL SmidthPvt. Ltd. v. M/s. SecanInvescast (India) Pvt. Ltd., (2013) 1 CTC 886.

Modicare Ltd. v. Gautam Bali, 2019 SCC OnLine Del 10511.

Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co., 1967 SCR (2) 378.

People's Security Life Insurance Co. v. Milton S. Hooks, (1988) 322 N.C. 216; 367 S.E. 2nd 647.

Pepsi Foods Ltd. &Ors. v. Bharat Coca-Cola Holdings Pvt. Ltd. &Ors., (1999) IILLJ 1140 DEL.

Percept D'Mark (India) (P) Ltd. v. Zaheer Khan, (2006) 4 SCC 227.

PUDR v. Union of India, AIR 1982 SC 1473.

Saltman Engineering Co. v. Cambell Engineering Co., (1948) RFC 203.

Shree Gopal Paper Mills Ltd. v. Surendra K. Ganeshdas Malhotra, AIR 1962 Cal 61.

Steller Information Technology Pvt. Ltd. v. Rakesh Kumar, 2016 SCC Online Del 4812.

Superintendence Company of India (P) Ltd.v. Krishan Murgai, (1981) 2 SCC 246.

Tapas Kanti Mandal v. Cosmo Films Ltd., Writ Petition No.2875 of 2018.

Terrapin Ltd v Builders' Supply Co (Hayes) Ltd., [1967] RPC 375.

The Constitution of India, 1950, Article 19(1)(g)

Trego v. Hunt, (1896), App. Cas. 7

V.N. Deshpande v. Arvind Mills, AIR 1964 Bombay 423.

V.V. Sivaram and Others v. FOSECO India Limited, 2006 133 CompCas 160 Kar.

Weiler International Electronics (P) Ltd. v. PunitaVelu Somasundaram, 2002 SCC OnLine Bom 1006.

Wipro Limited v. Beckman Coulter International,2006 (3) ARBLR 118 Delhi.

Zee Telefilms Ltd. v. Sundial Communications (P) Ltd., 2003 SCC OnLine Bom 344.