Employment Contract- An Overview
An employment contract is a basic contract which is governed by the provisions of the Indian Contract Act, 1872. Apart from this, the provisions of Indian labour law would be applicable for all employees to comply. The employment contract sets out the relationship between the employees and the company.
Such an agreement between the employees and the company is formal and sets out the requirements for companies to comply. All the expectations that are required to be carried out by the employee would be present under the Employment Contract.
What are the features of an Employment Contract?
The features of an employment contract would be same features of a normal contract. The following are the features of an employment contract:
- Competent Parties
- Legal Object
- Free Consent
As per the general provisions of the contract there must be an offer and acceptance. The offer and acceptance of the must be unconditional and absolute.
- Competent Parties
The parties of the contract must be competent to carry out the contract. This means that the employee must be a major and not disqualified under any law in force in India.
- Legal Object
The object of the contract or agreement must be valid and legal.
- Free Consent
The consent of the parties must not be affected by any factors.
Terms and Main Clauses of an Employment Contract
An employment contract is a contract between the employer and employee. Hence some of the following clauses and terms which have to be considered are as follows:
One of the primary areas which would be covered under the employment contract is the terms and conditions regarding the appointment of employees or employee in the organisation. Under this clause, the position of the individual would also be mentioned.
The employment contract would stipulate specific terms and conditions which govern the employment of the individual.
This section would include the duties of the employees. The roles and responsibilities of the employee would be mentioned here. Apart from this, what the employee is supposed to carry out and what he is not obliged to carry out would also be mentioned here.
The Wages or remuneration provided to the individual employee must be stated in the employment contract. If some form of commission is payable to the employee then the same must be mentioned. Any other incentives, benefits and pension requirements related to the employment must be mention. The period of payment of wages must also be mentioned in the employment contract.
Any misconducts and acts of the employee leading to misconduct of the employee would also lead to termination. The acts of the employee leading to termination must be mentioned in the employment contract.
If the employee is not able to carry out the responsibilities then this clause would deal with the situations which cause the permanent disability, death or incapacity of the employee to carry out the responsibilities.
This clause would deal with confidential information which is provided by the company to the employee. Under no circumstance is such information required to be provided to employees.
- Data Protection
This clause deals with the provisions related to data protection. Under no circumstances will there be any form of information breach with respect to the agreement.
This clause would state that if there is any loss which is directly or indirectly caused to the employer then the employee would be liable to indemnify any form of loss which is caused.
- Non-Compete Clauses
Such clauses would only be considered in employment agreements between companies and executives. Such executives would include directors and shareholders of the company. The provisions of the non-compete clause is governed by the Indian Contract Act, 1872. Such provisions state that any agreement in restraint of trade is not permitted and allowed. However, if the company wants to include a non-compete clause in the agreement such clause has to be within the guidelines of being reasonable and within the permissible limits of geography.
- Governing Law
Such clause is related to the governing law which will govern the provisions of the employment contract. Apart from this clause, there would be another clause dealing with the jurisdiction of the contracts and the court.
Procedure for Preparation of employment agreement
- A well efficient lawyer from our team shall contact you, and explain you the total process, and will understand the need of Employment Agreement by you.
- Once the objectives of the same are clear, the lawyer shall draft a sample Employment Agreement accordingly.
- The draft Employment Agreement shall be sent to you, for your review.
- The whole process takes around 3-4 working days