Pune: Infosys Bans Employees From Joining Competitors For Six Months, Complaint Filed Labour Commissioner

Sumit Singh

Pune, 19th April 2022: After getting many complaints from Infosys employees about their non-compete agreement, Nascent Information Technology Employees Senate (NITES) has filed a complaint against the IT giant with the Labour ministry.

The said clause of the company states:

 “In consideration of the above, 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.”

In its earnings report for the quarter ended March 31, 2022, Infosys reported an attrition rate of 27.7 percent as against 25.5 percent reported in the previous quarter.

NITES president Harpreet Saluja 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. If the agreement on the part of the employee puts a restraint even though partial, it is void, and, therefore, the contract must be treated as one which cannot be enforced. The clause of covenant being imposed is to operate after the termination of services and is too widely worded, and hence the company should be stopped from enforcing it.

The employee’s covenants should be carefully scrutinized because there is inequality of bargaining power between the employer and employee, indeed no bargaining power may occur because the employee is presented with a standard form of employment contract to accept or reject. At the time of the employment agreement, the employee may have given little thought to the restriction because of his eagerness for a job hence the employment contract of the Infosys Ltd is “tempt improvident persons, for the sake of present gain, to deprive them of the power to make future acquisitions and expose them to imposition and oppression”.

The contract of employment is likely to affect the employee’s means or procuring a livelihood for himself and his family. The restraint being put on employees is greater than necessary to protect the employer, is unduly harsh and oppressive to the employee.

We have submitted an official complaint to the Labour Ministry and Ministry of Corporate Affairs for appropriate actions & issuing necessary orders to Infosys Ltd. for removing such illegal, unethical and arbitrary clauses from the employment agreements.”

Note: This report will be updated after getting a statement from Infosys.