Infosys CEO Claims They Are Working With Govt To Resolve Non-Compete Issue; NITES Objects Strongly, Terms It Misleading

Infosys CEO Salil Parekh said that the company’s HR leadership is working with both local and central authorities.

The firm was summoned by the Central Labour Commissioner and later the Karnataka labour department over the non-compete clause dispute.

What the clause says

Infosys’ non-compete clause bars ex-employees from working for the same customer in rival firms such as TCS, Accenture, IBM, Cognizant, and Wipro for at least six months after quitting.

It also prohibits them from working for clients if they had worked with them in the 12 months before they quit.

Infosys’ defense

The firm defended that its primary concern is related to client confidentiality being observed if and when an employee leaves the company.

Parekh said that there are no constraints on anything within the company, which prevents anyone from “choosing what they want to do”.

He added that they’ve had extensive discussions and meetings with the appropriate authorities.

Employee Union Objects Strongly

Reacting on this development, Harpreet Saluja, President, Nascent Information Technology Employees Senate NITES said, “Infosys CEO Salil Parekh’s response to illegal and unethical non compete agreement question in press conference yesterday is a sheer lie & misleading. The company’s representatives using dilatory tactics purposely avoided attending the meetings held at Labour Commissioner Offices in Delhi & Bengaluru. Thisw
can be confirmed by seeing proceedings at Labour Commissioner Offices where the company has been marked absent every time. The company in their earlier press release has confirmed that this non compete agreement will not hamper the future employment of any employee, but the company is unable to justify “why this illegal agreement is still a part of offer letters?”.
Nascent Information Technology Employees Senate NITES union strongly condemns such false statements being made by CEO of the company Salil Parekh that they had lengthy discussions with authorities to potray that the company’s illegal methods are ethical.”

How it started

The Nascent Information Technology Employees Senate (NITES) had written to the Union Labour Ministry and the Ministry of Corporate Affairs in April over the non-compete clause.

It complained that it was illegal and arbitrary.

Following this, both parties were summoned by the Chief Labour Commissioner on three occasions, which Infosys skipped.

Infosys’ letter

Instead of attending, it wrote to the Union government that employees handle critical and sensitive customer projects, and that the clause protects client confidentiality for “a very limited period only” which people voluntarily accept.

iI had earlier said that the clause was a standard business practice in many parts of the world.

Employees are aware of the clause when signing the offer letter.

Passing the parcel

The matter was then forwarded to the state labour departments in Karnataka, Haryana and Maharashtra.

After this, Karnataka summoned the parties for a meeting, when Infosys sought more time to submit.

Then the Chief Labour Commissioner forwarded the grievance to the state labour departments of Karnataka, Haryana and Maharashtra, after which Karnataka summoned the parties for a meeting.

Legal experts’ take

Akshay Sachthey, Associate Partner, Phoenix Legal said that typically non-compete clauses are enforceable only during the term of employment and not thereafter.

He added that employers often include these clauses despite knowing that  it cannot be enforced.

So it serves more as a deterrent for employees.

However, employers’ need to protect proprietary information or trade secrets is recognised by courts.

Hence in cases of unauthorised disclosure, the courts will likely take the company’s side.