Employment Contract

Leave aside petty concerns of your organization w.r.t. employees and clearly define your relationship and goals with them. Help them grow with your growth. Get your employment contract drafted today by our expert lawyers and bring the utmost clarity in your interaction with employees. Before hiring, make sure to have the right employment contract in place!

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INTRODUCTION

What is an employment contract?

An entrepreneur knows the importance of having key Human Resource (“HR”) documents in place. Of all the HR documents, an employment contract is paramount in safeguarding the interests of any organization as well as its employees.

An employment contract is a legal document that helps both, the employer and an employee, in setting mutual boundaries within which they are expected to work with each other. It lays down guidelines, rules, duties, and obligations, that clearly define an employee’s relationship with the organization. An employment contract helps an organization manage its human resource in a more effective and efficient manner. It defines the position of responsibility that an employee will hold, his/her remuneration, term, termination, and such other provisions. It plays a key role in resolving workplace disputes more amicably.

Advantages of having an Employment Contract

Defines employee’s position

Employees know their rights and obligations from day one as they are explicitly defined in the contract – like available leaves, increment eligibility, etc.

Protects IP and confidential information

Organizations’ intellectual property and confidential information are protected from infringement and disclosure respectively.

Conflict Settlement

In the event of any dispute(s), employer and employee can quickly review the terms of the contract and arrive at a settlement. This employment agreement helps quickly resolve the matter.

Acts as proof

Verbal communications are difficult to record. An employment contract thus acts as a piece of evidence admissible in a court of law.

What key provisions should an Employment Contract include?

General terms and conditions-

These should provide for the roles and responsibilities that an employee is expected to discharge while in employment with the organization. Provide for date of joining, designation/position, annual CTC/remuneration, working days and hours, etc.

Probationary period-

It’s important to provide a probationary period where both, the employer and the employee, are able to forthwith terminate the engagement if either is not finding the change a suitable fit. A probationary period is usually between 3 to 6 months.

Cost to Company -

The most important and usually what employees are most interested in, this clause should clearly talk about the mode and manner of payment, necessary deductions that will be made, and actual remuneration in the hands of the employee.

Intellectual Property Rights -

An employee might bring up new ideas and inventions during his/her tenure with the organization. It’s important to clearly define beforehand who will have Intellectual Property right over such ideas/inventions. Usually, an organization tends to retain ownership of all such work developed under its employment.

Non-Compete and Non-Solicitation -

This helps in safeguarding the interests of the organization where they are saved from the employees undertaking a competing business immediately after the termination of the engagement. The idea is to ensure that the employees do not poach the clients/customers of the company, or use its proprietary information to directly compete with it.

Termination -

When and how either party can terminate an employment contract should be clearly mentioned in the Agreement. Instances of termination with or without cause should be mentioned and a provision relating to the notice period should be made a part of the contract.

Read our blog to get a detailed understanding of the clauses in an employment contract.

Confidentiality -

Any organization’s confidential and proprietary information is generated after years of practice and efforts. It would therefore want to ensure that such information is not passed on to anyone and everyone, inside or outside the organization, without any necessary permits or need for disclosure. This clause should therefore clearly define confidentiality and instances of its disclosure. You can also have a separate non-disclosure agreement with the employees.

FAQs

Frequently Asked Questions

Do all companies have an employment contract?

No, not all companies have an employment contract since it is not mandated by law. However, it is advisable to have one to define the rights and duties of both parties and to avoid any conflicts in the future.

When is an Employment Contract signed?

Employment contracts are usually signed by the employees on their joining date. Prior to assigning them to their desk, you can complete all the HR formalities.

Is it mandatory for an employee to sign an employment contract?

Any organization these days does not hire an employee if he/she refuses to sign an employment contract. While it is not mandated by law, it is a mandatory formality of any hiring organization.

Is an employment contract binding in nature? What if either party is in breach of the terms?

Yes, an employment contract forms a legally binding agreement and is therefore enforceable in a court of law. If there is any breach, one can approach the relevant court/forum for the resolution of disputes.

Does an employment contract require a notary and stamp paper?

There is no need to notarize an employment contract. However, you can have your employment contract printed on a stamp paper of the relevant amount. Stamp duty payable will depend on the state you reside in.

Do I need a lawyer to draft an employment contract?

Contracts become a legally binding documents once signed. It is therefore important to involve a lawyer to draft or review the terms of the employment contract. A Lawyer will ensure that the employment contract is fair and legally enforceable.

Need LegalWiz.in to step in? Here’s what we need

All we need from you is the name of your organization and detailed commercials you want to incorporate into your contract with employees. We can also create a custom employment contract that you can use with all employees of your organization from time to time by simply changing a few commercials.

Why Choose LegalWiz.in?

Drafting an employment contract can be an easy process with LegalWiz.in as our experienced lawyers guarantee the greatest level of client satisfaction and prompt service. The entire procedure is administered and conducted online, with constant expert support and communication. Our customers range from all geographic locations in India.

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