The Ministry of Labor and Employment has issued a notice to software giant Infosys over the company’s non-compete agreement. The company’s non-compete agreement prohibits former employees from working with the company’s clients at rival firms for six months after leaving the company.
The notice issued by the Ministry of Labor and Employment was sent to the company on April 22, addressed to Krishna Shankar, group head of human resources at Infosys. The notice calls for a ‘joint discussion’ on the issue before the Chief Labor Commissioner. The Ministry of Labor and Employment reported Money Control on April 28.
The notice comes in the backdrop of a recent complaint by IT union Nascent Information Technology Employees Senate (NITES), seeking removal of the clause from the non-compete agreement. NITES, in its letter to Labor Minister Bhupendra Yadav, called the clause “illegal and arbitrary” and sought his intervention to remove it. The union alleged that it was unethical and illegal to introduce such a clause due to the growing workforce.
NITES President Harpreet Saluja alleged that this clause is in violation of Section 27 of the Contract Act, 1972, which states that barring anyone from any legal profession or trade is not enforceable in a court of law. Representatives of NITES will also be present in the joint discussion between Infosys and Labor Ministry officials to be held today.
As of now, employees joining Infosys have to sign a mandatory non-compete agreement, barring them from working with clients they were associated with, for 12 months before they leave. . Former employees are also not allowed to work for the same client, which includes the company’s designated competitors including TCS, Wipro, Accenture, IBM and Cognizant.
The debate on Infosys’ non-compete agreement comes at a time when the IT giant is facing a record decline. The company’s job loss rate rose to 27.7 percent in the quarter ended March, from 13.9 percent in the first quarter of FY22. The IT sector has been facing the heat of high job losses lately. Other leading firms such as HCL and TCS also saw their dropout rates go up to 21.8 and 17.4 per cent respectively.
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