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I received a job offer from a company with following clauses

Clause 1:

We expect that you will not engage in or do any business or render any professional service outside the company either on full time or part time basis.

Clause 2:

You will not take up any other work for remuneration (part-time or otherwise) or work in advisory capacity or be interested directly or indirectly in any other trade or business during the employment with the company without permission in writing from the Chairman/Managing director of the company.

Currently, I'm trying to build a product in my free time. I have no plan to sell or generate money from this product in near future. This is because I don't have an idea how the product will evolve. The product is still in ideation stage. It is even possible that I might even drop the idea all together. But , at this moment very much interested in building this product.

The question I have now is, my interest in building above product breaks the above mentioned clauses in the offer letter? Do I need to disclose this to the company? What might happen if don't disclose this before signing the offer?

---------------UPDATE-----

Thanks all for the responses. I talked with the hr. HR told me as long as their is no conflict of interest with current role & NDA that I sign with us is upheld, I can continue working on my project.

closed as off-topic by scaaahu, Lilienthal, Dawny33, panoptical, mcknz Oct 29 '15 at 17:58

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  • 3
    You will have to talk to a lawyer to answer this for you. – Jane S May 5 '15 at 5:21
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    Why not use it as a matter of negotiation when discussing whether to accept the offer or not - remember, its an offer letter, not a firm contract, you can negotiate at this stage. Its quite common to strike items during the negotiations before accepting - I typically have this sort of language struck because I work on open source applications, and have it replaced with something to the effect of I won't work on my own projects during work hours unless its directly related, and even then there is a case by case agreement in place. Work hours is for work, non-work hours they dont pay me for... – Moo May 5 '15 at 9:05
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    IANAL, but it sounds like as long as it is basically a hobby (no income from it at all), then you should be fine. However, if you ever do get to the stage where you want to sell it or get investors, you will most certainly need to talk to your company and maybe leave the job entirely. – David K May 5 '15 at 16:55
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It's quite common to see clauses like this, the level of how serious they are differ between companies but you don't want to be sorry, you want to be safe.

Do I need to disclose this to the company?

Yes, you do.

What might happen if don't disclose this before signing the offer?

You don't have to disclose it before you sign the contract, but if you don't get a written permission before you begin working in it again they can, depending on your location, sue you, fire you or claim your project as their own with the justification that all projects done by you are done in their service.

I'd definitely disclose it before I'd sign, in my case I actually did, and ask if there'd be a problem for you to continue working at that project, as long as it's not a direct competition to the company.

These two clauses are, however, countering each other since one forbids you to work at all in another payed project, while the other allows you to do so as long as you have permission.

Best thing would be to hire a lawyer to clear this up but I'm pretty confident that a written permission will be sufficient since you can always blow it in their face if something nasty will come up, which is doubtful though.

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I'm not sure about what are the laws in your country but in mine, this kind of clause are out of scope. This company is hiring you to work but cannot impose you to only work with them.

Imagine that you need more money for like an expensive surgery, but what they are offering is not enough. You should be free to work anywhere else on your free time, as long as you don't break any confidential

I've already seen similar clause that forbid's you to work for a competitor. And even if you agree with this clause (you sign the contract), they cannot impose you this without a heavy remuneration (which is not mentionned in the contract).

What I think is that these clause are mostly here to scare you. If you take something like that in front of a court there's no way the company wins.

Moreover, your clause are talking about 1) business or professional service and 2) another work for remuneration. You can continue to work on your project safely and worry about your contract when you want to commercialise it.

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    " This company is hiring you to work but cannot impose you to only work with them." -- they can if they want to and you sign it. I work in a big company and here you have to get a written statement from your boss and the department of Compliance that you are indeed allowed to work outside of work in a very specific project. – Jonast92 May 5 '15 at 17:11
  • @Jonast92 do you have to, or does the company say that you have to? – Jeff Lambert May 5 '15 at 18:29
  • Garey which country is the this certainly terms like are the norm for most jobs in English speaking country's' - as the legal systems are similar. – Pepone May 5 '15 at 19:12
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    @Jonast92 As I said, in my country, most company are adding abusive clause in your contract because it'll scare most people ! These scared people will blindly accept these clause and will not try to break them. However those clause are illegal and if taken in front of a court, there's no way the company wins mostly because with these clause, the company is trying to control your life outside work. Moreover, they cannot fire you because you break an illegal clause, but let's be honest, going in front of a court with your employer is bad. – Gary Olsson May 6 '15 at 7:35
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    @Jonast92 Not necessarily. In many European countries, there are a number of things that cannot be included in a work contract, by law. But because employees are assumed to be at disadvantage when negotiating with an employer, they are not expected to point this out when signing the contract, any illegal clause will simply be considered void if the company ever tries to enforce it even if the employee did agree to it in their contract. I don't know Gary's location or if workers' protections really go as far as he says but employers cannot impose anything. – Relaxed May 6 '15 at 7:46

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