Employment Agreement

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    Drafting of Employment Agreement

    An Employment Agreement is the sole legal document between the Employer and Employee, which lays out the rights, duties, and obligations of both parties during the employment period. An Employment Agreement is a crucial document in managing employees as it lays down the rights and obligations of both the Employer and the Employee. From junior-most level to the CEO, everyone is an Employee, and to manage the employees efficiently, one needs to have an Employment Agreement.

    Elements of Employment Agreement

    An Employment Agreement should clearly define the terms and conditions of employment. The most common elements discussed in the Employment Agreement are:

    • Job Description of the Employee
    • Term of the Employment
    • Employee benefits
    • Remuneration/compensation to the Employee
    • Leave Policy
    • Grounds for termination
    • Protection of Confidential information
    • Ownership of Intellectual Property
    • Dispute Resolution
    • Governing laws and jurisdiction
    • Any other provisions deemed to be relevant to the Employer.

    In the case of individuals hired on contractual basis for a limited period of time such as candidates hired for specific projects Service Agreement is drafted instead of Employment Agreement.

    Position in Law

    Employment Agreement has not been mentioned anywhere in the Indian Contracts Act, 1972. Still, as per section 27 of the Act, an agreement, which restrains an individual from carrying on a lawful profession, trade, or business, is void to the extent it restrains them. The restraint has to be reasonable to be permitted by law. Employment policies such as leaves, maternity leaves, working hours, etc. are governed by the applicable Shops and Establishment Act. Other relevant laws that govern various aspects related to employment are Factories Act,1948, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, etc.

    Drafting of Employment Agreement is simple with LegalWiz.in as it has experienced lawyers who ensure highest customer satisfaction and timely delivery of services. Whole process is managed online, with regular communication and assistance by the professionals available throughout. We have clients in all major cities of India including Mumbai, Delhi, Bangalore, Pune, Ahmedabad, Hyderabad and more as well as our services have equally relevant reach within smaller cities and towns in the country.

    Significance of Employment Agreement

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    Explore FAQs for Employment Agreement

    Frequently Asked Questions


    Employment Agreement is legally valid and binding if it has reasonable restrictions upon the Employee. Unreasonable clauses and restrictive covenants render that portion of the Agreement invalid.


    An Employment Agreement needs not to be mandatorily notarized by a public notary, but stamp duty has to be paid on the same. Stamp duty rates can be checked in Schedule of the applicable Stamp Act as it differs from state to state.


    A contractor is hired for fixed-term projects, and the Agreement governing the relationship is Service Agreement. In contrast, an employee is hired for full time, and the Agreement governing the relationship is Employment Agreement. A contractor is paid fees for which he needs to raise invoices, whereas the employee is paid a fixed salary.


    Yes, an Employer has the right to the services of the Employee on an exclusive basis. It can be clearly stated in the Agreement that the Employee cannot provide his services to someone else during the continuation of Agreement.

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