The way you've phrased that implies that policy is reasonable. It isn't. Why should anybody have to prove that he is a valuable employee before he gets freedom to do what he wants (on a case-by-base basis) in his free time?
A typical process is that you "disclaim" up front all the IP you take into the company, and they own everything after that.
A typical exception to that process that might be accepted is that they own everything related to their business that you come up with after you join the company.
An exception that can be pretty hard to get is that you own everything you come up with off-hours. This is reasonable, (though obviously you can disagree and turn the job down): if the company is providing you access to knowledge and domain exposure, you shouldn't be exploiting it to start your own business on the side. Also, it can be hard for them to pinpoint exactly when you came up with something, which creates legal headaches down the road.
if the company is providing you access to knowledge and
domain exposure, you shouldn't be exploiting it to start
your own business on the side
Actually, why not? Is it so bad that employee will benefit in ways more diverse than getting the paycheck?This is the line of reasoning that breeds contempt down the road - company says "you can't have your own ideas", employee says "Fine, then I'm working here 9-to-5". Everybody loses.
Regardless of the IP agreement, the important thing is to be at least a little careful. If you have a new, world changing piece of software you're writing, do it on your own time with your own resources. Avoid doing anything at all with it on company time, and don't use your company owned laptop to do development.