Labour Ministry Issues Notice To Infosys Over Non-Compete Clause For Employees

Sumit Singh

Pune, 27th April 2022: Days after IT giant Infosys issued a non-compete clause for its employees who resign, the Union Labour Ministry issued a notice to the company. A joint meeting is scheduled in Bengaluru.

The representative of Nascent Information Technology Employees Senate (NITES), which had filed a complaint against the IT giant with the Labour ministry, and Krish Shankar, Group Head – Human Resources, Infosys, have been called for joint discussion before the Chief Labour Commissioner (C) in Bengaluru on April 28 (Thursday).

The unethical clauses of the Infosys are as follows:

 “I agree that for a period of six (6) months following the termination of my employment with Infosys for any reason, I will not:

a. accept any offer of employment from any Customer, where I had worked in a professional capacity with that Customer in the twelve (12) months immediately preceding the termination of my employment with Infosys;

b. accept any offer of employment from a Named Competitor of Infosys, if my employment with such Named Competitor would involve me having to work with a Customer with whom I had worked in the twelve (12) months immediately preceding the termination of my employment with Infosys.”

In its earnings report for the quarter ended March 31, 2022, Infosys reported an attrition rate of 27.7 percent as against 25.5 percent reported in the previous quarter. Some experts believe that the company wants to bring down the attrition rate, hence they have come up with the non-compete clause.

NITES president Harpreet Saluja said, “The restriction contained in the Employment letter which is mentioned above is clearly in restraint of trade and therefore illegal under section 27 of the Contract Act. It is not seeking to enforce the negative covenant during the term of employment of the employee but after the termination of service. If the agreement on the part of the employee puts a restraint even though partial, it is void, and, therefore, the contract must be treated as one which cannot be enforced. The clause of covenant being imposed is to operate after the termination of services and is too widely worded, and hence the company should be stopped from enforcing it.

The employee’s covenants should be carefully scrutinized because there is inequality of bargaining power between the employer and employee, indeed no bargaining power may occur because the employee is presented with a standard form of employment contract to accept or reject. At the time of the employment agreement, the employee may have given little thought to the restriction because of his eagerness for a job hence the employment contract of the Infosys Ltd is “tempt improvident persons, for the sake of present gain, to deprive them of the power to make future acquisitions and expose them to imposition and oppression”.

The contract of employment is likely to affect the employee’s means or procuring a livelihood for himself and his family. The restraint being put on employees is greater than necessary to protect the employer, is unduly harsh and oppressive to the employee.

“Taking cognizance of NITES complaint, the Ministry of Labour & Employment has issued a notice to Infosys for joint discussion regarding illegal non compete agreement. We are highly thankful to Minister of Labour and Employment Bhupendra Yadav for taking prompt action to safeguard the interests of IT Employees. All the Infosys and IT sector employees are hopeful and looking forward to a favorable decision by the government”, Saluja told PunekarNews.in.