What can you do in case you got terminated for doing a side job?

My husband was working in a private retail company before. While he was working with them, he helped a friend sell his friend's own designs of t-shirts through Facebook.

His previous employer saw that and terminated him and they are accusing him that he is copying their designs and stealing customers by selling his friend's items while working which is not true.

He threatened my husband that they will sue him and to avoid that, they're gonna remove him from work and will pay him only the days of his work (15 days) which my husband agreed because he doesn't want any trouble.

That's what they did. They didn't pay him his gratuity for staying almost 3 yrs with them as well as airline ticket, vacation leave and public holidays.

Now it's been a year since it happened and my husband is already working with another company and suddenly his previous employer saw him in a restaurant and asked him why he is there and threatened him that they are gonna sue him still. What do we need to do? Thank you.