The Department of Labor and Employment has sent software giant Infosys a notice regarding the company’s non-compete clause. The company’s non-compete clause prohibits former employees from working in rival companies for six months after leaving the company’s customers.
Addressed to Krish Shankar, Group Head of Human Resource in Infosys, the notification from the Ministry of Labor and Employment was sent to the company on April 22. The notice calls for a “joint discussion” on the matter before the Chief Labor Commissioner, Ministry of Labor and Employment on April 28, Money Control reported.
The notice comes in the background of a recent complaint from the Nascent Information Technology Employees Senate (NITES), an IT union, seeking to remove the clause from the non-compete clause. NITES called the clause in its letter to Labor Minister Bhupendra Yadav “illegal and arbitrary” and asked for his intervention to remove the clause. The union claimed enforcement of such a clause was unethical and illegal due to its increasing turnover.
Harpreet Saluja, president of NITES claimed that the clause was a violation of section 27 of the Contract Act, 1972 which states that any agreement prohibiting anyone from any lawful occupation or profession is unenforceable in a court of law. Representatives from NITES will also attend today’s scheduled joint discussion between Infosys and Department of Labor officials.
As of now, employees joining Infosys must sign a mandatory non-compete agreement that prohibits them from working with the customers they were associated with for 12 months before quitting. Also, the former employees may not work for the same client as the company’s named competitors, including TCS, Wipro, Accenture, IBM and Cognizant.
The debate over Infosys’ non-compete clause comes at a time when the IT giant is dealing with a record loss. Company turnover 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 turnover lately. Other large companies such as HCL and TCS also saw their turnover rise to 21.8 and 17.4 percent, respectively.
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