Infosys Justifies Stopping Ex-Employees From Working For Competitors; Case Transferred To State Govt

Infosys defended its position on the no-compete rule it puts in its offer letters, saying that it is a “common and standard business practice” in the sector.

Why The Clause Is Important

The rule is in place to protect customer information that is “critical and sensitive”.

It has also informed the office of chief labour commissioner that the clause is applicable for a limited period only.

Infosys said that its employees handle critical and sensitive customer projects as part of their regular services.

Hence, the purpose of the clause is to ensure business and client confidentiality.

Santhosh K Nair, associate vice president, Human Resource Department stressed that it is “applicable for a very limited period only”.

Background

The controversy began when the Pune-based labour union–Nascent Information Technology Employees Senate (NITES) –appealed to the central labour ministry seeking removal of Infosys’ non-compete clause.

It called the clause “arbitrary, unethical and illegal”.

NITES founder Harpreet Saluja wrote that the restriction “is clearly in restraint of trade and therefore illegal under section 27 of the Contract Act”. 

He also called it “unduly harsh and oppressive” and poses restrictions greater than necessary.

The union had received complaints from 100 Infosys employees regarding the rule.

Why Union Is Protesting

The reason this caused a stir is that as per the clause, the employee cannot join “Named Competitors” such as TCS, Wipro, HCL Tech, Accenture, Cognizant, and IBM for six months after leaving the firm.

This applies in cases where the new job involves working with a customer with whom the employee had worked in the preceding 12 months during their stint at Infosys.

Infosys argued that the clause is a common addition in employment contracts in the IT services sector in India and many parts of the world.

Common Part Of Offer Letters

It is standard practice “for employment contracts to include controls of reasonable scope and duration to protect confidentiality of information, customer connection and other legitimate business interests”.

Candidates voluntarily agreed to be bound by the obligations in the clause prior to joining the company.

Complaints Forwarded To Authorities

Three calls for joint discussions between the parties turned out to be unsuccessful after Infosys’ executives skipped the meetings.

Remis Tiru, the deputy chief labour commissioner has forwarded the complaints to state labour commissioners of Haryana, Maharashtra and Karnataka *where Infosys is based) for “further necessary action”.