Today I will be taking a document that all of us in our lifetimes at least once in our careers come across yes exactly, I am talking about the employment agreement.
The employer-employee relationship has always been a topic of legal discussion. It has constantly been evolved and witnessed many changes in the recent past and present.
- What is an employment agreement?
Employment agreement refers to an agreement between an employer and his employee, specifying the core terms of the employment, and maybe negotiated before or after hiring.Although it may be oral or implied from conduct, written agreements are preferred by law.
Once the employment agreement is signed, it becomes legally binding on both the parties, which means that if either party violates the terms of the agreement, they can be held legally responsible for their actions.
- Essential feature of this or any type of Agreement is:
- Proposal/ Offer- Initiation/ First step
- Acceptance- Giving a Wilful assent to the offer
- Consideration – After the acceptance has been made
- Competent Parties- (Attained the age of major , sound mind)
- Legal aspect – Should be approved by law (not fraudulent)
- Free Consent – not through violence , fraud or undue influence
Even if one of the steps is missed the contract would be void.
- Why is it relevant?
This Agreement not only clarifies issues such as compensation , holidays , salary , work hours and job description but the company also secures its confidentiality , intellectual property is being created by the employee during the course of employment and many such warranties .
The Employment agreement sets out job security , defines rights and duties, protection of both the parties and to protect confidential information through NDA(Non- disclosure agreement) or Confidentiality clause.
- What Does an employment agreement include?(basics)
- Job title : Description of the work and position, working hours , person who you will report to.
- Term : Duration of the employment.
- Remuneration: Salary (CTC , IN HAND, TDS )
- Obligations/Duties of the parties:
- Benefits: (Health insurance , ESOP)
- Vacation and Sick leave: (Holiday breaks , maternity leave , sick leave)
- Confidentiality clause: ( Ensure employee doesn’t provide any proprietary information to competing parties)
- Dispute Resolution: (For resolving issues through arbitration or mediation)
- Termination:(Grounds which will be termed as grounds for termination of the employee)
Important clauses for the agreement that should be incorporated in an employment agreement.
1.COMMENCEMENT DATE, PROBATION AND TERM : This is the primary clause of any employment agreement this clearly specifies the probation date and only after completion of that period one is being hired after completing this probation period and satisfies the job profile assigned in agreement and thereafter the employee is inducted for a term and shall be renewed thereafter . Probation is also known as lock-in-period some companies prepare a different clause for it.
2.JOB DESCRIPTION: Merely specifying a title or designation is not enough as in position should be briefly described and the kind of assignments that shall be subjected to the employee in the course of employment it defines the work assigned and often a detailed job description is attached as a schedule to the agreement, this is useful when disciplinary action is taken against the employee or when his employment is terminated on non-performance of the duties.
3.PLACE AND TIME OF WORK: This clause clearly sets out employees work place and time, many times in the clause it’s is mentioned in case of transfers the authority lies with the manager of the branch and wherever the employee is transferred he/she shall work according to time and branch of new location where he/she is being transferred.
4.EMPLOYEMENT REMUNARATION AND BENEFITS: This is also known as the compensation clause, this typically consists of salary, a bonus, and other prerequisites’ such as accommodation, insurance, access to company cars , it will also cover the reimbursement of expenses incurred by the employee during the term of employment performing the duties a schedule is prepared wherein the salary which is usually paid after cutting TDS under Income tax Act 1961 and provident fund contribution and CTC basis.
5.LEAVES : This clause specifies the number leaves allowed which are in most cases sick and privileged leaves ,the contract may cap on the aggregate of both kind of leaves and exceeding the cap shall result in proportionate deduction in salary or if the leaves are unused that may be carried forward to the next financial year or can be paid for the same unused leaves.
6.TERMINATION OF EMPLOYMENT : The termination of an employee may be due to fault in of the employee or without any reason , which normally doesn’t happen .
Also, an employee can terminate the agreement without reason but by proving a notice in reasonable time, the same happens when an employer lays off the employee a notice period is being given to employee.
7.CONFIDENTIALITY: In course of employment, it should be clearly defined what is known as confidential information , intellectual property, proprietary marks , trade secrets , and all the things which an employer wants to protect and breach in this may lead to termination of the employee .
8.NON-COMPETE AND NON SOLICIT :This clause simply means an employee will not encourage any partner , client, consultants, agents or potential clients to terminate the relationship with the employer, this clause is being inserted to safeguard the interest of the employer and breach of this leads to termination, this clause is also applicable for a finite period even after an employee has left the company.
A non -compete clause defines that the employer shall not compete the employer being self-employed , manager , consulting partner or through third-party for a finite period in where the competitor business is located at.
9.Reference to company policies: Internal processes of the company not covered in the employment agreement but is a important part of the employment agreement.
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
If you are interested in participating in the same, do let me know.
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