A Bengaluru court has vacated its earlier order that had barred Swiggy from creating third-party rights over the Employee Stock Option Plans (ESOPs) of a former Assistant Vice President. The legal battle stemmed from a dispute over the ESOPs granted to the employee during their tenure at the food delivery giant.
Background:
The employee had been granted stock options as part of their compensation package, but after leaving the company, there were disagreements regarding the transfer and vesting rights of these ESOPs. Swiggy had reportedly sought to assign third-party rights over the stock options, but the former employee filed a suit to prevent this, leading to the initial order blocking such rights.
Court’s Rationale:
The court, after reviewing the arguments, concluded that there was insufficient ground to continue with the ban on transferring third-party rights, thus lifting the order. The decision indicates the court’s view on ensuring that companies’ rights over their employee agreements are not unduly hindered after the termination of employment.
Existing Measures:
Typically, ESOP agreements include clauses that regulate the transferability and ownership of stock options post-employment. In this case, the dispute centered on whether these clauses were enforceable and to what extent third-party rights could be imposed.
Conclusion:
This ruling is significant in the context of corporate agreements and ESOP rights, emphasizing the enforcement of contractual clauses after employment ends. It could have implications for similar cases in the future, where the balance between company policies and employees’ rights is contested.