EMPLOYMENT AGREEMENT

People think that an employment agreement is merely a document that describes the conditions of your work, right? Not true. This important document may significantly affect your rights and responsibilities as an employee. It is critical to understand the conditions of this document before beginning a new role. 

Are employment agreements legal in India?

Yes. According to Indian law, the employment agreements are “legal” and "rational." They are subject to a number of laws including the Shops and Establishments Act of different states, the Industrial Disputes Act of 1947, and the Indian Contract Act of 1872. In most situations, it is required of employers to give their workers formal employment agreements.

Types of Employee Agreements 

The Indian legal system recognizes a range of employment agreements, each created to meet certain needs in the workplace. There are four typical kinds. Employees and the organization can decide which is best for them and proceed appropriately.

Permanent Employment Agreement  

As it's the simplest, employers and employees usually use this type of employment contract. An employee with this type of employment contract may work either full or part-time. Since they expire whenever either the employer or the employee chooses to change their conditions, these employment agreements don't have a set expiration date.

Fixed-Term Agreement 

Independent hirers are the primary users of these types of employment arrangements. This kind of employment contract includes terms and conditions together with a set end date. This agreement contains important facts about the beginning and ending dates of the work, working hours, pay and benefits, guidelines for delivering services, and responsibilities. Independent contractors have certain rights under these kinds of employment contracts when they are employed by the company.

Casual Employment Agreement  

This kind of work agreement combines elements of permanent and fixed-term employment. In this there is a predetermined end date for the work or agreement termination, it is comparable to a fixed-term contract. The fixed working hours for new hires under it are comparable to those of a permanent contract.

Zero-Hour Worker Agreement 

There is no set schedule of work for any employee under this kind of contract. A notification of a specified time limit that an employee is expected to work is not required to be given by the organization. When evaluating these kinds of work contracts, flexibility and time management are taken into account. It is not mandatory for workers to work for just one company. Instead, they can freely provide their services to other businesses while continuing to work for their previous employer. Because it provides more freedom in the workplace, this is a popular kind.

Drafting an Employment Agreement 

Clearly defining the terms and conditions of work is a must in an employment agreement.

Checklist of must-have clauses

The most crucial sections of an employment agreement are

1. Job Title and Description

This section describes the type of job covered by the employment agreement. It is crucial to make this clear right away to guarantee that the employer and the employee are in agreement and that there has been a "meeting of minds" on the employee's obligations.

2. Term of Employment

This section will outline how long the employment will last. If required, this section may also contain provisions for employment renewal. Renewals might be periodic, joint, etc. The term "schedule" is another term for this part. If the worker is not going to be employed full-time, it is crucial to guarantee maximum openness by stating which days and what times they will be working. 

3. Salary, Bonuses and Benefits

This section, which describes the remuneration the employee would earn as a result of their employment, is quite significant. Before accepting this condition, proper negotiations must be conducted. Through this condition, workers must also make sure they are getting bonuses that they are due. The yearly hourly wage, increases, bonuses, incentives, health benefits, corporate stock options, retirement plans, signing bonuses, and other perks should all be included in the pay and benefits package covered by this clause.

4. Leave Policy

Holidays, leaves, and paid time off are essential elements of a contract of work. A thorough time-off policy should specify how leave is accumulated, when it may be utilized, and the steps workers must follow to profit from it. These provisions should also include information about paid absences and holidays that are determined by the firm.

5. Overtime Rules

Since no employee, especially in India, can avoid working extra, there is a condition that is frequently disregarded but is highly significant. Therefore, they should likewise receive payment for the same. Usually, overtime is paid on an hourly basis.

6. Ownership of Intellectual Property

An employment contract must contain provisions that specify whose intellectual property generated during work belongs. For instance, a software engineer employed by a company is likely to write some original code. However, the business will own that intellectual property, just like in typical employment arrangements. Such clauses ought to be made clear in advance to avoid confusion later on.

7. Protection of Confidential Information

Employees must maintain their identity under certain conditions, as outlined in the confidentiality clause. Employees have access to the trade secrets of the organization while they are employed, thus these requirements are crucial. If an employee discloses any sensitive information, the confidentiality agreement usually spells out the repercussions legally.

8. Ground For Termination

These provisions will outline the conditions that will allow an employee to be fired. As an employer, you have an obligation to make sure that the termination does not damage or impair the company's reputation. Therefore, it is also necessary to add the clauses providing severance benefits.

9. Communication Channels

It is critical to identify the individual who an employee reports to. As a result, effective lines of communication promote efficiency and transparency. It is important to effectively create these channels of communication to facilitate hassle-free task completion.

10. Date and Signature of Parties Involved

The parties' signatures at the conclusion of the agreement make it a legally enforceable contract and signify their official approval of its contents. The date is also significant since it indicates the exact moment the contract began.

Sample Format

This Employment Agreement** ("Agreement") is made and entered into on [Date] between [Employee Full Name], who resides at [Employee Address] ("Employee"), and [Company Name], a [State/Country of Incorporation] company with its major place of business at [Company Address] ("Company").

1. Opportunities and Duty:

1.1 Position: [Supervisor/Manager] will receive direct reports from the employee in the capacity of [Job Title].

1.2 Duties: Employee consents to carry out all tasks and obligations given to them by the company in connection with the position. This comprises [explain particular roles and responsibilities].

2.Salary and Perquisites:

2.1 Salary: Employee shall receive a basic pay from Employer of [The salary Amount] each [month/year]. Payment must be made on a biweekly or monthly basis using [form of pay].

2.2 Benefits: The employee is eligible for the following company incentives: [List certain perks, such as health insurance, etc].

3. Working Hours: The employee commits to be employed [amount] hours each week, usually [days] starting at [start time] and stopping at [end time]. Based on company requirements, overtime can be necessary.

4. Vacation and Leave: Each year, the employee is entitled to [number] weeks of paid holiday leave. Examples of supplementary time off that will adhere to business rules are holidays and sick leave.

5. Confidentiality: Employee undertakes to keep all proprietary and secret company information private. This duty persists both during and following the job termination.

6. Termination:

6.1 Termination for Cause: Either party may end this agreement for reasons by providing the other party with written notice if the other party breaches a material clause.

6.2 Termination without Cause: The Company may, with [number] days' written notice or by accepting money in place of notice, terminate the Employee's employment without cause.

7. Non-Compete & Non-Solicitation: During the employment term and for a period of [duration] following termination, the employee undertakes not to participate in any business that directly competes with the company. Additionally, for a comparable amount of time, Employee undertakes not to approach Company staff members or clients.

8. Other:

8.1 Governing Law: The laws of [State/Country] shall apply to the interpretation and enforcement of this agreement.

8.2 Entire Agreement: All previous written and verbal agreements are superseded by this agreement, which represents the whole understanding between the parties.

As of the Effective Date, the parties hereto have completed this Employment Agreement IN WITNESS WHEREOF.

[Name of Company]

By: _____________________________________ [Designated Signatory]

[Full Name of Employee]

Date: [______________________]

**This is only a generic template. The requirements of the position and the current legislation may need alterations to certain terms and phrases. Getting legal counsel before signing any employment contracts is highly advised.

Common Mistakes to Avoid 

It is important to avoid the following errors while preparing an employment contract:

• Not being particular and focused on the details of the job contract.

• Inadequate and ineffective staff communication channels.

• Missing information on how to change the terms of employment or the contract.

• Defining the terms of employment in jargon-filled, technical language as opposed to plain English.

• Favoring either the employer or the employee over the other.