Infosys, which was summoned by the Central Labour Commissioner, Delhi in the month of April 2022 and after that the Karnataka labour office over the non-compete clause on July 4, 2022, said in a Q1FY23 press conference that it is working with the respective authorities.
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”.
Earlier, the company sought time till July 13 from the Karnataka Labour Office.
Responding to media at the Press Conference, Infosys CEO and MD Salil Parekh said, “The HR leadership of the company is working with the respective authorities both locally and centrally.”
“The company’s primary concern is related to client confidentiality being observed if and when an employee leaves the company,” he added.
“We have no constraints on anything within the company, which precludes anyone from choosing what they want to do. We’ve had extensive discussions and meetings with the appropriate authorities,” Parekh said.
Commenting on this, 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.”
#Infosys CEO Salil Parekh has no clue about #NonCompeteAgreement. In press conference he is justifying it by stating confidentiality of clients. But probably forgot that there's separate clause for confidentiality in employment letter.#ITEmployees #JusticeforEmployees #NITES pic.twitter.com/hmMf1od11A— Harpreet Singh Saluja (@_harpreetsaluja) July 25, 2022
“CEO Salil Parekh says in a Press Conference that they had lengthy discussions with authorities regarding illegal Non-Compete Agreement. Without attending any meetings how and when Infosys had lengthy discussions with authorities? Ministry of Labour and Employment, Government of India can confirm easily whether they were present for any meetings or not. NITES strongly condemns such vague statements by Infosys.” Harpreet added.
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.
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.”