Karnataka labour office summons Infosys over non-compete clause on July 4

The tussle between information technology (IT) major Infosys and Pune-based labour union Nascent IT Employees Senate regarding the non-compete clauses in the employment contracts will now be fought on a different turf – the Karnataka Labour Department.

The office of the assistant labour commissioner of Karnataka has sent a notice to the managing director and CEO of India’s second-largest software exporter for a joint discussion on July 4 at 3 pm “to examine and verify the contents of the complaint filed by the employee of your organisation,” read the notice.

Infosys did not respond to a request seeking comment on the latest development.

The notice comes after the central labour ministry’s attempts to call for joint discussions since April had hit an impasse as Infosys abstained from the meeting.

In a letter to the deputy chief labour commissioner in New Delhi in May, Infosys had said the non-compete clause in its offer letters was to ensure business confidentiality and is a common practice among IT companies in India.

“The central government, after the intervention, had earlier forwarded the case to the state government labour departments of Haryana, Maharashtra, and Karnataka,” said Harpreet Saluja, president of the union in a statement.

He added: “In pursuance to this, the Karnataka state government’s labour ministry has issued a notice. We believe the company wouldn’t be able to escape the provisions of the Indian Contract Act on jurisdiction grounds and exploitation of the employees will be stopped now.”

Saluja is also named as the petitioner in this complaint.

Infosys had skipped the three previous meetings with the central labour ministry on May 27, May 16, and April 28, following a written complaint by the Pune-based IT employees union seeking intervention from the Labour Ministry and the Corporate Affairs Ministry to remove the non-compete clause from the employment contracts.

According to Infosys’ contracts, an employee shall not accept for six months an employment offer from “named competitors” such as TCS, Wipro and HCL Technologies among others, if the new job involves working with a customer with whom the employee has worked in the preceding 12 months during .during his/her stint at Infosys. The letters also point out that an employee should not accept employment offers for six months from a customer with whom he/she has directly worked in the preceding 12 months.

The restrictions contained in the offer letters are “restraint of trade and therefore illegal” under Section 27 of the Indian Contract Act 1872, the complaint had noted.