I’ve been closely following the class action law suite filed on behalf of 100,000 tech employees whose wages were artificially lowered in silicone valley due to agreements between tech employers (Intel, Adobe, Google and Apple) not to hire each other’s employees and sharing wage scale information, Thus they were able to control salaries knowing that no one would tempt the employees with better salaries. As an Egyptian tech worker I was initially surprised, after all such agreements are common practice in Egypt, these gentlemen’s agreements as they call them prevent us from moving to better offers even if we were fully qualified for announced vacancy just because of the company we are currently working in. You get to learn about these agreements early on your career and you never think about their fairness or legality, they become “the norm”. I don’t think anyone ever asked why are they none documented gentlemen’s agreement rather than contractual obligations you sign in your contract, like for instance the clause that states you can’t work for a competitor for as long as 2 years after you leave your hiring company. Maybe just maybe this agreement is not legal, perhaps thats why you cant find any documentations, and hence it is called a gentlemen’s agreement.
A gentlemen’s agreement (or gentleman’s agreement) is an informal and legally non-binding agreement between two or more parties. It is typically oral
The rise of such agreements took place after the infamous Etisalat Egypt head hunt, when they poached entire teams from all the usual tech-giants / competitors promising them double and sometimes triple the salary they were making, in turn that lead to a market wide salaries hike. In an attempt to make sure salaries will stay manageable several of the multinational tech giants struck these agreements to not cross hire. Knowing that this would guarantee that employees wouldn’t have a way out, and thus would settle for whichever salary they were getting.
After 2006′s Salaries hike, Egyptian tech giants decided to keep their employees salaries under control
In our highly specialized field usually you can only work in a handful in multinationals so there aren’t as many options as you’d imagine. I believe the company with the largest number of gentlemen’s agreements is Vodafone I think its common knowledge that employees can’t move from Vodafone to EMC, Alcatel Lucent or even IBM. Whom in turn must have their own agreements with a bunch of other companies. Oracle on the other hand doesn’t follow suite, since its mode of operation relies on poaching from others, and they have another technique they use to guarantee employee retention under a fixed salary (but thats another story). Try going on linkedin and go through various Egyptian accounts you’ll find that there is a growing trend, exiting a telecom to oracle and then to another vendor. The red giant is much more than a brand, its the escape door for all who’ve given up on moving out/on.
I know a couple of friends whose aspirations to get a much better job hit the wall of gentlemen’s agreement, talented engineers who applied in vacancies in vendors initially got accepted, then got rejected with a call from HR referring to the gentlemen’s agreement, some were able to overturn that through negotiating with the current employers. However by the time you are done negotiating your exit the vacancy is usually filled by someone else. Naturally the lax labor laws we have in Egypt would make following the american model quite hard, I can only imagine how hard it’d be to file a law suite claiming market wide salary fixing between tech giants. What really surprises me though is the none nonchalant attitude adopted by the HR departments in the mentioned multinational tech giants, how they talk about these agreements as if they are normal fair and the only way to do business.
Sources :
