Infosys has a non-compete clause in the offer letters which restricts the employees who resigned from the company can’t work with the ‘named competitors’.
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.
“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.
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.
Responding to media on development in legal compliance on this issue, Infosys CEO and MD Salil Parekh had said in Press Conference that the HR leadership of the company is working with the respective authorities both locally and centrally.
Harpreet Singh Saluja, President of Nascent Information Technology Employees Senate (NITES) said, “CEO Salil Parekh has no clue about Non-Compete Agreement. When asked in a Press Conference about the illegal Non-Compete Agreement, Salil Parekh is justifying it by stating the confidentiality of clients, but probably he forgot that the confidentiality of clients is already covered under separate Confidentiality clause in employment letter.”
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.”
A negative covenant that restricts the employment of an employee after the cessation of an employment contract with a competitor would fall within the periphery of Section 27 of the Indian Contract Act.
Being violative of Section 27 of the Indian Contract Act, such restrictive covenants may not be enforceable in the courts of law. The employer may not be able to injunct the employee from joining the competitor.
Wipro’s employment contract also has similar non-compete clauses. It says, “You confirm that for a period of six (6) months after separation of your employment from the Company (irrespective of the circumstances of or the reason for the separation), you will not accept any offer of employment from a customer or client with whom you have interacted or worked in a professional capacity representing the Company during the six (6) months preceding the date of separation.”
Wipro cannot prohibit employees from working with competition after their stint at the company has been completed. The company cannot restrict an employee, post termination of their employment, from working with a competitor.
A lot of IT companies in India have struggled with significant attrition rates over the previous several quarters. To address this issue companies have decided to revise their salaries.
Many IT companies, including Wipro, Infosys, and TCS have announced initiatives, including compensation increases and bonus payments to retain personnel.
The IT companies intend to keep workers by increasing salaries, giving bonuses, and providing other benefits. The Indian IT sector employs over 51 lakh individuals as per a recent report by NASSCOM.