Infosys has now been summoned by the Karnataka government over the complaint of the company including non-compete clauses in its employment agreements for IT and BPO employees. The complaint, sent by the Nascent Information Technology Employees Senate (NITES) to the Union Labour Ministry, had said that the non-compete clauses are “illegal and arbitrary”.
The Karnataka Labour Department, on June 21, summoned both Infosys and the IT employees union for a joint meeting on July 4 “to examine and verify about the contents of the complaint filed by the employee of your Organisation”. It stated that they are to appear in person with the necessary original documents, and if they do not, the matter will be decided ex parte.
“We believe that now the company wouldn't be able to escape the provisions of Indian Contract Act on jurisdiction grounds and exploitation of employees will be stopped,” NITES President Harpreet Singh Saluja said.
In April, the Pune-based IT employees union wrote to the Labour Ministry as well as the Corporate Affairs Ministry and sought intervention to remove the non-compete clause from employment contracts. As per the employment contract, the non-compete clause states that for six months after leaving the company, the employee cannot work with a customer they engaged within the year before they left the company. Additionally, it said they cannot accept an offer from a named competitor — TCS, Accenture, Cognizant, IBM, and Wipro — if it requires the employee to work with a customer they worked with in the year preceding their exit.
Infosys, in a statement, had said it was a standard business practice in many parts of the world and is disclosed before people decide to join the company. It does not “have the effect of preventing employees from joining other organisations for career growth and aspirations," the statement said.
Infosys had been summoned by the Labour Commissioner it called meeting on three different occasions. Infosys did not attend these meetings. In a written response to the Ministry on May 24, Infosys HR Department Vice-President Santhosh K Nair said employees are core to the business and their reputation, and they handle critical and sensitive customer projects as a part of their regular services.
“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,” it said, adding that candidates “voluntarily agree to be bound by the obligations specified in the clause prior to joining the company”.In June, the Chief Labour Commissioner sent the grievance to the state labour departments of Karnataka, Haryana and Maharashtra, based on which the Karnataka government has called for the parties for a joint meeting.