Labour Ministry Issues Notice to Infosys on Complaint over 'Non-compete Agreement'

The Ministry of Labour and Employment has issued a notice to software giant Infosys regarding the company’s non-compete agreement. The company’s non-compete agreement bans former employees from working with the company’s clients in rival firms for six months after quitting.

Addressed to Krish Shankar, Group Head of Human Resource in Infosys, the notice, issued by the Ministry of Labour and Employment was sent to the compay on April 22. The notice calls for a ‘joint discussion’ on the issue before the Chief Labour Commissioner, Ministry of Labour & Employment on April 28, reported Money Control.

The notice comes in the backdrop of a recent complaint by the Nascent Information Technology Employees Senate (NITES), an IT union, seeking removal of the clause from the non-compete agreement. NITES in its letter to Labour Minister Bhupendra Yadav called the clause “illegal and arbitrary” and sought his intervention for its removal. The union alleged that the enforcement of such a clause was unethical and illegal due to rising attrition.

Harpreet Saluja, president of NITES alleged that the clause was a violation of Section 27 of the Contract Act, 1972 which states that any agreement restraining anyone from a lawful profession or trade is not enforceable in a court of law. Representatives of NITES will also be present in the scheduled joint discussion between Infosys and labour ministry officials today.

As of now, employees joining Infosys have to sign a mandatory non-compete agreement barring them from working with the clients, with whom they were associated, for 12 months before they quit. The former employees are also not allowed to work for the same customer as the company’s named competitors including TCS, Wipro, Accenture, IBM, and Cognizant.

The debate over Infosys’ non-compete agreement comes up at a time when the IT giant has been facing record attrition. The company’s attrition rate jumped to 27.7 per cent in the quarter ending in March from 13.9 per cent in the first quarter of FY22. The IT sector has been facing the heat of high attrition recent. Other major firms like HCL and TCS also saw their attrition rates move to 21.8 and 17.4 per cent respectively.

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