Infosys comes down hard on quitting employees
IT giant Infosys [Get Quote] is having all its employees sign a non-compete clause which states that even after the employee quits the company, he/ she cannot work for any of Infosys' competitors. In fact, the clause allegedly lists by name the top five rival companies -- Tata Consultancy Services [Get Quote], Accenture, IBM Global Services, Cognizant and Wipro [Get Quote].
It also disallows employees from taking up job offers presented them by the organisation' s customers for upto six months after quitting, if the employee in question has worked on that particular customer's assignments in the previous one year.
Infosys has justified this clause, saying it is a common practice for companies to safeguard their interests and bind their employees to them. Although such a contract's legal standing is disputed, many employees simply prefer to pay up the penalty when breaching it, rather than face a powerful company's legal team in court.
Should this action be taken by the other Companies also? Our company has a high attrition rate. What is the major legal procedure for this?
What are the disadvantages for this?
Please give ur valuable comments.
Regards
Pranita
From India, Delhi
1IT giant Infosys [Get Quote] is having all its employees sign a non-compete clause which states that even after the employee quits the company, he/ she cannot work for any of Infosys' competitors. In fact, the clause allegedly lists by name the top five rival companies -- Tata Consultancy Services [Get Quote], Accenture, IBM Global Services, Cognizant and Wipro [Get Quote].
It also disallows employees from taking up job offers presented them by the organisation' s customers for upto six months after quitting, if the employee in question has worked on that particular customer's assignments in the previous one year.
Infosys has justified this clause, saying it is a common practice for companies to safeguard their interests and bind their employees to them. Although such a contract's legal standing is disputed, many employees simply prefer to pay up the penalty when breaching it, rather than face a powerful company's legal team in court.
Should this action be taken by the other Companies also? Our company has a high attrition rate. What is the major legal procedure for this?
What are the disadvantages for this?
Please give ur valuable comments.
Regards
Pranita
From India, Delhi
Dear Rishi,
Well i m sorry i cannot give you any suggestion on this but i find this as a very good retention strategy by Infosys to safe guard thier interest.Well I think this is easily possible for big companyes.You an also do it but you need to provide youre mployees very tempting pay package, perks, and other benfits thne you impose any restrictions they will continue to work with them
Regards,
Anu
From India, Calcutta
Well i m sorry i cannot give you any suggestion on this but i find this as a very good retention strategy by Infosys to safe guard thier interest.Well I think this is easily possible for big companyes.You an also do it but you need to provide youre mployees very tempting pay package, perks, and other benfits thne you impose any restrictions they will continue to work with them
Regards,
Anu
From India, Calcutta
As far as my knowledge there is no law restricting to add such type of clause, but there were court cases wherein the court declined to give leverage to companies to amend terms of appoitment allready agreed withapointed employees. For existing employees this can be taken as a 'BOND', but again a 'bond' can be taken only if company has imparted special training to the employee and has spent considerable amount on it and loosing the employee will lead to financial and time loss.
Hi Pranita,
according to sec27 of the indian contract act an employer cannot restrain the employee from starting a new business or joining a rival firm.....subject to one exception that he/she shd not leak out secrets of the concern they worked in. there hv been may cases and in the Indian history no employee has won the case with similar circumstances. I therefore erquest you to provide me with the full details so that i can give you further information in this regard.
jyotika
From India, Mumbai
according to sec27 of the indian contract act an employer cannot restrain the employee from starting a new business or joining a rival firm.....subject to one exception that he/she shd not leak out secrets of the concern they worked in. there hv been may cases and in the Indian history no employee has won the case with similar circumstances. I therefore erquest you to provide me with the full details so that i can give you further information in this regard.
jyotika
From India, Mumbai
Hi,
Think on , if some companies put a clause that for all Microsoft Professionals they are not allowed to work in any other organization working on Microsoft Technologies or Cisco Techanicians, etc.
They how will you respond to this. Do you again call it as a good retention policy by Big companies?
I was looking for some forum where we all people can create some sort of database to define companies policies and how those policies can effect the professional community.
I have seen some worst companies and really want to tell that people should not join them even if they are starving.
Think on , if some companies put a clause that for all Microsoft Professionals they are not allowed to work in any other organization working on Microsoft Technologies or Cisco Techanicians, etc.
They how will you respond to this. Do you again call it as a good retention policy by Big companies?
I was looking for some forum where we all people can create some sort of database to define companies policies and how those policies can effect the professional community.
I have seen some worst companies and really want to tell that people should not join them even if they are starving.
Dear Rishi
To me prima facie the above stipulation in both the situations. not to join those five listed same business competitor companies as well as not to work with clinets for 6 months , appear to be void. At least two High Courts have held similar to it. I will check up Supreme Court jugements on this and will come back to you.
The High Court jugements are as follows :
1. Negative Covenant. Enforcement of agreement between the employer and the employee restrining the employee from engaging or undertaking employment for 12 months from the date . Uneforceabble. void and aganist public policy. Pepsi Foods Ltd. Vs. Bharat Cocacola Holdings Pvt. Ltd. 1999, LLJ.1140. Delhi High Court.
2. A service covenant extended beyond the termination of the service is void. Sandhva Organic Chemicals Pvt. Ltd. Vs. United Phosphorous Ltd. AIR. 177. 1990. Gujrat High Court.
From India
To me prima facie the above stipulation in both the situations. not to join those five listed same business competitor companies as well as not to work with clinets for 6 months , appear to be void. At least two High Courts have held similar to it. I will check up Supreme Court jugements on this and will come back to you.
The High Court jugements are as follows :
1. Negative Covenant. Enforcement of agreement between the employer and the employee restrining the employee from engaging or undertaking employment for 12 months from the date . Uneforceabble. void and aganist public policy. Pepsi Foods Ltd. Vs. Bharat Cocacola Holdings Pvt. Ltd. 1999, LLJ.1140. Delhi High Court.
2. A service covenant extended beyond the termination of the service is void. Sandhva Organic Chemicals Pvt. Ltd. Vs. United Phosphorous Ltd. AIR. 177. 1990. Gujrat High Court.
From India
Jyotika has really given a perfect info by stating from law point of view. But wanted to know that why employees has not won any case and which case, i.e. a case of leaking the secrets or joining a rival firm??
Kindly reply on this Jyotika!
Thanks,
Chinmay
From India, Mumbai
Kindly reply on this Jyotika!
Thanks,
Chinmay
From India, Mumbai
hi Rishi,
A very good topic for discussion.
A company cannot restrict anybody once the contract of employment is terminated.
The only way you can Stop an employee's employability in rival companies is by MOU between the Companies in question. this is seen in Telecom industry to some extent in india as per my knowledge.
The HR team in these companies can restrict their employability during reference check while selecting.
Secondly the company customers can be obliged to this, which is again a decision of company -- coz u cannot dictate terms to your customers. they pay for what they get from you. such clauses may seem absurd for a sensible customer.
The entire clause will not hold any waters as Right against discrimination and Right to equal oppurtunities comes in picture.
you cannot stop anyone like this. this might even lead to union activities.
Infact this seems more like personnel management than Human resource management. We have come a long way on this...
Thanks & Regards
Deepak. M
From India, Mumbai
A very good topic for discussion.
A company cannot restrict anybody once the contract of employment is terminated.
The only way you can Stop an employee's employability in rival companies is by MOU between the Companies in question. this is seen in Telecom industry to some extent in india as per my knowledge.
The HR team in these companies can restrict their employability during reference check while selecting.
Secondly the company customers can be obliged to this, which is again a decision of company -- coz u cannot dictate terms to your customers. they pay for what they get from you. such clauses may seem absurd for a sensible customer.
The entire clause will not hold any waters as Right against discrimination and Right to equal oppurtunities comes in picture.
you cannot stop anyone like this. this might even lead to union activities.
Infact this seems more like personnel management than Human resource management. We have come a long way on this...
Thanks & Regards
Deepak. M
From India, Mumbai
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