BENGALURU: With this spurt in C-suite moves in the Indian IT sector, and some of them ended up in court, Separation agreements Contracts that replace previous employment contracts are becoming fashionable.
Legal experts say they are used to remind departing employees of their continuing obligations to the company and sometimes to impose additional restrictions specific to the employee's role in the company. “For example, if the employee has relationships with one or more customers, the employer can use the agreement to remind the employee not to solicit those specific customers, which is even more important if the employee moves to a competitor,” said one Legal expert. The person did not want to be named.
However, managers may need to be encouraged to sign such agreements, particularly if they impose onerous restrictions on them.

Sources told TOI that former Infosys presidents Ravi Kumar and Mohit Joshi had signed separation agreements with Infosys before their exit. The agreements are said to have set out the contractual obligations of confidentiality, non-promotion and non-disparagement.
Kumar joined Cognizant as CEO less than three months after leaving Infosys. Joshi joined Tech Mahindra as CEO-designate in June, immediately after leaving Infosys, and took full charge in December when incumbent CP Gurnani retired. In 2017, Infosys was reported to have signed a separation agreement with outgoing CEO Vishal Sikka, which included mutual indemnification and non-disparagement obligations.
At least a dozen senior executives have left for competitors in recent years. These executives are familiar with competitive business intelligence, contract pricing, customer milestones, financial commitments and penalty clauses.
Wipro recently filed a lawsuit against its former CFO Jatin Dalal, who left Wipro in November and joined Cognizant as CFO in December, alleging that he violated non-compete agreements.
Pooja Ramchandani, employment, labor and benefits partner at law firm Shardul Amarchand Mangaldas, said a separation agreement is a mutually negotiated document that sets out the terms of separation from employment. “Not only does it provide details of the separation package, but it also typically covers waiver and release of claims aspects. It provides for post-employment non-solicitation restrictions,” she said.
A related email sent to Cognizant, Infosys and Tech Mahindra did not elicit a response till publication.