Labour Ministry sends notice to Infosys on a non-compete clause issue

Labour Ministry sends Notice to Infosys in subject to Non-Compete Clause
According to the notice, Ministry will hold a joint discussion before the Chief Labour Commissioner (Central) in New Delhi on April 28.

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. 

According to the notice, Ministry to hold a joint discussion before the Chief Labour Commissioner (Central) in New Delhi on April 28.

Krish Shankar, Group Head- Human Resources, Infosys and Harpreet Singh Saluja, President- NITES who had filed the complaint, have received the communication from the Ministry of Labour & Employment.

As per 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.

Infosys had said, “These are fully disclosed to all job aspirants before they decide to join Infosys, and do not have the effect of preventing employees from joining other organizations for career growth and aspirations.”

“It is a “standard business practice” for employment contracts to include “controls of reasonable scope and duration to protect the confidentiality of information, customer connection, and other legitimate business interests,” It had said in clarification.

NITES president Harpreet Saluja had 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.”


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