Adani and Ambani – The Details Behind The No Poaching Agreements

Adani and Ambani are considered the biggest contenders in the Indian market and have amassed oceans of wealth in the long run.

Being so powerful they themselves had to bring out laws that are necessary for employment management.

Hence in 2022, they entered into a No poaching agreement to prevent both from recruiting employees upon themselves.

So without further adieu, let’s dive into the details!!

What is a No Poaching Agreement?

This intricate agreement has been executed between 2 employers in which they consent not to solicit or poach employees from each other.

As a highly qualified professional is an asset, businesses usually enter into this agreement so that competitors don’t gain an advantage in the field whilst sharing confidential information.

In certain situations, competitors often ‘poach’ human resources through various resources that usually affect the interests of the business. To prevent these mishaps and to carry out their business as flexibly as possible without fear of such allurement or voluntary switching of jobs of the employees.

The Non-poaching agreement is not something that violates section 27 of the Contract Act, 1972. For those that aren’t familiar with legal concepts, Section 27 of the Indian Contract Act, concerns a special category of contracts which the law treats as void, namely, an agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind and is to that extent, the agreement is void.

All the Details of the Pact:

The Adanin Group led by Gautam Adani, and Mukesh Ambani have entered into a non-poaching agreement with Mukesh Ambani Led Reliance Industries, leaving both groups restricted from hiring talent from each other.

This specific agreement has come into effect from May this year and will be applicable to all their business.

The most interesting thing about this is that it’s between big giants of the Indian economy. Well, the story behind this can be traced back to Adani Group’s announcement to enter the petrochemical spec with Adani Petrochemical Limited last year. The Reliance industry has been known to have a large presence for quite a lot of time in this industry. Another reason for the agreement can be traced to the fact that both of these corporate entities will be crossing paths in the high-speed data services race, with Adani bidding towards the 5G spectrum deals.

The Adani Group has stakes in solar, renewable energy, ports, airports, power generation, and natural resources. The Adani Group is also experimenting in the petrochemical and enterprise broadband sectors, where it recently purchased spectrum for 212 crore. Through Adani Data Networks, The Adani Group aims to provide enterprise customers with services in six authorised service areas. With 426 million subscribers, Reliance Jio Infocomm is the third-largest mobile network provider in the world and has emerged as the top bidder for 5G spectrum.

Due to all these reasons no poaching agreements were a necessity. The Non-poaching agreements have always been around in India as a practice and are increasingly becoming prevalent in India, as the war for talent intensifies and wage costs soar. Companies are at risk from rising labour expenses, particularly in talent-scarce areas, and a potential bidding war can make this risk worse. Non-poaching agreements are legal as long as they do not restrict an individual’s right to seek employment.

Final Note:

With Adani and Ambani expanding their business into new sectors, this practice might become a regular thing for these entities. When the market is filled with talented individuals, it is a necessity to protect sensitive business information.

Hence, the need for non-poaching agreements and non-solicitation agreements has become a need of the hour.

That’s all folks.

We’ll be back with more informative blogs such as this soon.

Until then, Happy Trading!!

Commodity Samachar
Learn and Trade with Ease