Can IT companies like Wipro, TCS, and others prohibit Ex-employees from working with rivals?

The Indian IT sector employs over 51 lakh individuals as per a recent report by NASSCOM,  with top companies like TCS, Infosys, Wipro, HCL Tech, and Tech Mahindra being some of the largest employers. Interestingly, the employment contracts of these companies have 'non-compete clauses' and other restrictions that prevent employees from working with competition even after their stint at the company has been terminated.

TCS, Infosys, Wipro, HCL Tech, and Tech Mahindra are a few examples of the leading Indian IT firms profiled in a recent paper outlining their employment contracts.

Infosys's non-compete clause, for instance, reads as follows:

"After my job with Infosys ends for any reason, I promise not to do the following for a period of six months:

• Take a job offer from a client for whom I'd done professional work in the twelve (12) months before leaving my job at Infosys
• Accept any employment offer from a Named Competitor of Infosys if working for such a Named Competitor would require me to work with a Customer with whom I had worked in the twelve (12) months immediately preceding my departure from employment with Infosys.
• Named Competitor shall mean the following entities and their fully owned subsidiaries for purposes of this Non-Compete Agreement:

1. TCS (Tata Consultancy Services)
2. Accenture Limited
3. IBM
4. Cognizant Technology Solutions

In opposition to Wipro Limited, experts agree that a clause like this would be unenforceable in court. Section 27 of the Indian Contract Act touches on the outskirts of a negative covenant that prevents the employment of an employee following the termination of an employment contract with a rival.

Any agreement that prevents a person from engaging in a lawful profession, trade, or business of any sort is null and void under Section 27 of the Indian Contract Act of 1872.

The employment agreement at Wipro contains comparable non-compete clauses. You agree that for six (6)months following your separation from the company (regardless of the circumstances or the reason for the break), you will not accept any offer of employment from a customer or client with whom you have interacted or worked professionally representing the company in the six months preceding the date of separation.

Experts agree that Wipro has no legal right to prevent its former employees from joining a competitor.

According to the Indian Contract Act of 1872, "non-compete provisions" are illegal. Article 19 (g) of the Constitution allows every citizen of India the right to pursue any profession, trade, or business," and the Indian Contract Act of 1872 outlaws non-compete terms in contracts.

The Indian Contract Act guarantees its inhabitants the freedom to engage in "any trade or profession/occupation," so long as it does not violate public order or morality under Article 19.

Several Supreme Court and High Court rulings declare non-compete agreements null and unenforceable at first glance. However, this is also subject to reasonable constraints, which fall to the courts.

If a court determines that a provision of the agreement is overly restrictive, negative, or arbitrary, it will likely strike it down. However, if the court also notes that the provision is preventive in nature—that is, employers must prevent employees from disclosing certain sensitive and confidential information, such as trade secrets—it may find that the provision is valid, but only to that extent.