Infosys Issued Notice By Karnataka Labour Department For Stopping Employees From Working For Competitors

The Karnataka government has called up Infosys regarding complaints against the company for its non-compete clauses in its employment agreements for IT and BPO employees.

The issue

The complaint was sent by the Nascent Information Technology Employees Senate (NITES) to the Union Labour Ministry.

They alleged that the non-compete clauses are “illegal and arbitrary”.

The Karnataka Labour Department, on June 21 had summoned both Infosys and the IT employees union for a joint meeting on July 4.

The IT major has been called “to examine and verify about the contents of the complaint filed by the employee of your Organisation”.

In-person appearance required

They have to appear in person with the necessary original documents, and if they do not, the matter will be decided ex parte, which means with respect to or in the interests of one side only.

Harpreet Singh Saluja, President, Nascent Information Technology Employees Senate NITES said, “The Central Government after intervention had earlier forwarded the case to State Government Labour Departments of Haryana, Maharashtra & Karnataka. In pursuance to which now Karnataka State Government’s Labour Ministry has issued a notice. We believe that now the company wouldn’t be able to escape the provisions of Indian Contract Act on jurisdiction grounds and exploitation of employees will be stopped. “

What the clause says

The matter began in April when NITES wrote to the Labour Ministry and the Corporate Affairs Ministry.

It sought intervention to remove the non-compete clause from employment contracts.

The non-compete clause bars an employee from working with a customer they engaged within the year before they left the company for six months after they leave.

It also states that the employee cannot accept an offer from a named competitor — TCS, Accenture, Cognizant, IBM, and Wipro — if the employee has to work with a customer they worked with in the year preceding their exit.

Infosys’ response

Infosys defended that it was a standard business practice in many parts of the world and is disclosed before people decide to join the company.

It does not prevent employees from joining other organisations for career growth and aspirations.

On three occasions the company skipped meetings called by the Labour Commissioner.

The HR Department Vice-President Santhosh K Nair wrote to the Ministry on May 24 that employees are core to the business and their reputation, and they handle critical and sensitive customer projects as a part of their regular services.

Candidates agree to clause beforehand

The purpose of the non compete clause is to protect business and client confidentiality.

Moreover, the obligation is applicable for a very limited period only.

Candidates “voluntarily agree to be bound by the obligations specified in the clause prior to joining the company”.

In June, the Chief Labour Commissioner sent the grievance to the state labour departments of Karnataka, Haryana and Maharashtra, based on which the Karnataka government has called for the parties for a joint meeting.