- A no-poaching agreement will prevent employees from both groups from joining together.
- Legal eagles say no law prevents conglomerates from entering into such pacts.
- Pact prevents a talent war in media and new energy companies.
What makes this pact interesting is that it is between two of India’s largest conglomerates and lately both have entered sectors where the other plays a major role. Last year,
There have always been no poaching agreements in India and these are becoming more common in India as the war for talent intensifies and wage costs rise. Rising labor costs pose a risk to businesses, especially where talent is scarce and a potential bidding war could increase this risk. A senior professional at a global executive search firm that works with both conglomerates said on the basis of anonymity: “These pacts have always existed and are still informal in nature. From here, both groups can no longer poach each other.” No poaching agreements are legal as long as they do not restrict a person’s right to seek employment.
A partner at a law firm said there is no law prohibiting two entities from entering into such agreements as long as they are not dominant players in that sector. Currently, both entities do not have a dominant combined market share in any sector. In the past, several companies have built such clauses into their employees’ contracts, preventing them from competing. And in some cases, employees couldn’t join rivals even after the contract ended. In these cases, there is a cooling off period during which employees cannot join rivals.
The Adani Group has interests in renewable energy, power generation and distribution, ports, airports, solar energy and natural resources. The Adani Group is also testing waters in the petrochemical and corporate broadband space for which it has acquired spectrum worth 212 crore in the recently closed auctions. The Adani Group aims to serve enterprise customers in six licensed service areas through Adani Data Networks. Reliance Jio Infocomm is the world’s third largest mobile network operator with a subscription base of 426 million and has become the largest bidder for 5G spectrum.
As Adani Group and Reliance Industries have global ambitions in different companies, this pact allows them to foreclose their respective talent pools both in India and abroad.
Reliance, on the other hand, also has huge ambitions in the new energy and solar space, where Gautam Adani has an edge. Since both groups are present in multiple sectors, where talent is scarce in India, this pact can help prevent a war for talent. Media is another sector where both are present and there too employees have been told that they cannot accept offers from the other group. Senior management personnel who have been in talks with both sides about potential opportunities have now been briefed by the executive search firms about the pact and have had to withdraw their candidacy.
Most of these agreements are informal and cannot hold up in court, experts say. However, with two major conglomerates entering into a non-poaching agreement, it can be restrictive for workers across the board. https://londonbusinessblog.com/ has also learned that letters to junior employees have also been withdrawn in certain cases following the conclusion of the pact.
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