India’s second-largest IT services provider, Infosys stated in a letter dated May 24 to the deputy chief labour commissioner in New Delhi that the Non-complete clause in its offer letters is to ensure business confidentiality.
The company 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 in the human resource department of Infosys 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 third listening before Labour Commissioner Central after notice from Labour Ministry on the non-complete clause on May 17 and April 28.
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.
According to media reports, Pune-based IT union NITES now may file a complaint against Infosys with Maharashtra state’s labour ministry. This decision has come as discussions with the Central Labour Ministry and Infosys could not conclude.
