India’s second-largest IT services provider, Infosys has now been summoned by the Karnataka labour office over the complaint of non-compete clauses in its employment agreements for IT and BPO employees.
The complaint was registered by IT Union, Nascent Information Technology Employees Senate (NITES) to the Union Labour Ministry, who had said that the non-compete clauses are “illegal and arbitrary”.
On June 21, the office of the Assistant Labour Commissioner Karnataka summoned both Infosys and the IT employees union, NITES for a joint meeting on July 4 to examine and verify the contents of the complaint filed by the employee of your Organisation.
Karnataka Labour Office also stated that they are to appear in person with the necessary original documents, and if they do not, the matter will be decided ex parte.
However, Infosys did not respond to a request seeking comment on the latest development.
In the month of April, the central labour ministry had attempted to call for joint discussions between Infosys and the IT employees’ union NITES but Infosys abstained from the meetings in New Delhi.
On May 24, Infosys stated in a letter to the deputy chief labour commissioner in New Delhi that the Non-complete clause in its offer letters is to ensure business confidentiality.
And the company has also informed that it is a common practice among IT companies in India and that the clause is applicable for a limited period only.
This came in response to calls for discussions on the issue after a complaint by Nascent Information Technology Employees Senate (NITES), the Ministry of Labour & Employment has issued a notice to Infosys to hold a “joint discussion” on the enforcement of the non-compete clause that bans its employees from joining a rival tech firm within six months of exiting Infosys.
Santhosh K Nair, Associate Vice President- Human Resource of Infosys has said, “The purpose of the clause under discussion is to ensure business and client confidentiality. Moreover, the obligation is applicable for a very limited period only. Further, the clause under discussion is a fairly common and standard business practice in employment contracts in the lT services sector in India.”
“Candidates voluntarily agree to be bound by the obligations specified in the clause prior to joining the company, recognizing the relevance and importance of such a clause,” he added.
The company failed to appear in the three previous listening on May 27, May 16, and April 28 before Labour Commissioner Central after notice from Labour Ministry on the non-complete clause.
The central government, after the intervention, had earlier forwarded the case to the state government labour departments of Haryana, Maharashtra, and Karnataka,” said Harpreet Saluja, President of the NITES in a statement.
What is the non-compete clause?
As per the agreement, Infosys has a non-compete clause in the offer letters which restricts the employees who resign from the company can’t work with the ‘named competitors such as Tata Consultancy Services, IBM, Cognizant, Wipro, and Accenture’ for 6 months if the new job involves working with a customer with whom the employee has worked in the preceding 12 months during his/her stint at Infosys.
“…the clause under discussion is fairly common and standard business practice in an employment contract, in the IT services sector in India. Candidates voluntarily agreed to be bound by the obligations specified in the clause prior to joining the company recognizing the relevance and importance of such a clause,” Infosys had explained.