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NBFCs are known as the Non-Banking Financial Corporation. NBFCs are regulated by the Reserve Bank of India. These companies are basically involved in the business of loans & Advances, acquisition of stocks, equities, debt etc issues by the government or any local authority. Once the NBFCs are incorporated the next step is to formulate company policies and the Employment contract is one of the most important aspects of this. Moreover, in this blog, we will talk about the Employment Contract by NBFC.
An employment contract is an agreement between the employee and an employer, enforced by the law. Whenever there is an induction of new people into a company, you will see a lot of documentation going around. An employment contract is one of the crucial document that defines all the guidelines to be followed by an employee and an employer.
Employment contracts in India are governed by the Indian Contract Act, 1872.
There are certain points that must be discussed in the employment contract. We will take a look at this one by one-
It includes the details of the salary of an employee working with NBFC. If there are any other benefits offered by the company, that has to be mentioned as well. For example- does the NBFC provide medical insurance, paid vacations, expense reimbursement, etc.
There might be a case of hiring an employee for a specific period of time. If there is any specific period of employment, then it has to be mentioned in this. Sometimes It might be possible that NBFC is having loads of work to deal with for a limited period of time. So, in that case, an employee will be hired for that particular period only. And this will be clearly specified in the contract to avoid the future.
The designation of an employee must be clearly specified such as manager, executive, vice president, etc. and the department he or she will be contributing to. Hiring an employee for an NBFC is a Diligent process. You must conduct a background verification and make sure that the prospected employee is competent enough to handle the position.
The employment contract specifies the area of work of an employee, all the roles and responsibilities to be fulfilled and task to be managed. As we all know NBFC is a kind of loan company, there will be a
The confidentiality clause is considered one of the crucial aspects of any employment contract. It helps in preventing data breach; employees are prohibited to leak any information to the outsiders. As we know that NBFC is involved in money matters, like accepting the money, sanctioning the loan etc, and for these, there will be signing and submission of documents. So in this case, all the information has to be kept secret and confidentiality must be maintained.
Usually this clause is mentioned in the separate clause, however, you can include this in the employment contract as well. This clause says that you are not allowed to operate any business, which may prove to be a competition for the company, you are working with.
You need to check for the post-employment restrictions, there may be a limitation of doing business with the clients of the former company, once your contract expires with that company.
When an employee plans to leave a company, there is a notice period that needs to be served by an employee. It also includes the cases, when a company can terminate the contract of an employee.
There are several types of contracts available in India. Further, we will take a look at these employment contracts one by one.
There have been cases where employees are seen to claim the fruits of creative efforts. If there is anything invented during the employment period, the rights of that invention generally belong to the employer.
What about the invention going, on the other side at your home which is near its completion. It is always seen as a best practice to highlight anything you are already working on.
The employee working with the company wants the just-cause termination. None of the organization wants the employer to have wide discretion during the termination.
Have you ever heard about the term moonlighting? Moonlighting basically means having a second job secretly at night, besides the regular job. NBFC deals with lots of confidential and delicate information, so you need to be stringent in this case. Employment contract by NBFC must tell the employees whether there is an exclusive employment provision or not.
We hope, you have a better understanding of the employment contract by now. If you are running an NBFC then you can keep in mind to mention all these points in the employment contract. Even if you are an employee of an NBFC, then also you must know the following points to avoid any misunderstanding in the future.
For your better help and understanding, we have provided a sample of Employment Contract by NBFC.
THIS EMPLOYEE SERVICE CONTRACT executed at __________(place) on this the _______ day of _____________ _________(date)
_______________(Company’s name), a company incorporated under the Companies Act, 2013, represented by it’s ________________Mr./Ms. _______________(name of an employer), son of / wife of/ daughter of Mr. ___________(parent/spouse name) having it’s registered office at ________________________________________________(address), hereinafter referred to as the EMPLOYER (which expression shall, unless it is repugnant to the context, mean and include it’s successors-in-interests, administrators and permitted assigns);
Mr./Ms. ______________(name of an employee), son of / wife of/ daughter of Mr. ____________ (Parents/spouse name), Indian, ______________, aged about _____________ (age)years, residing at ______________________________________________ (address of an employee), hereinafter referred to as the EMPLOYEE.
The EMPLOYER is carrying on the business of ________________(business detail).
The EMPLOYER called for applications from the eligible candidates for the post _________ (Designation) and in response thereto an application-dated ____________(date of response from employee) was forwarded by the EMPLOYEE to the EMPLOYER.
On processing the application and the relevant documents, the EMPLOYER found the EMPLOYEE adequately qualified for the post and offered to appoint him as __________________________(position in the company) in the Company.
The EMPLOYEE has accepted the said appointment on the terms and conditions hereinafter set out.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL OBLIGATIONS AND UNDERTAKINGS CONTAINED HEREIN THIS AGREEMENT WITNESSETH AS FOLLOWS
NAME OF THE POST:
The said EMPLOYEE is hereby appointed as ______________(Designation of an employee).
PROBATION AND CONFIRMATION:
The EMPLOYEE shall be on probation for a period of ________(temporary employment). The decision of the management on the performance of the EMPLOYEE during the period of probation is final and binding on the EMPLOYEE.
DURATION OF EMPLOYMENT:
On successful completion of probation, the EMPLOYEE shall be appointed as a permanent EMPLOYEE of the EMPLOYER for a period of ____________(Permanent employment period).
PLACE OF POSTING:
The EMPLOYEE shall report to work at ___________________(time of reporting), on ___________________(date of reporting).
HOURS OF WORK:
The EMPLOYEE is required to work from ___________ to ________(Working days) during the Weekdays. The weekly holiday would be on ________(holidays).
The EMPLOYER shall pay the EMPLOYEE a stipend of Rs. __________(salary)/- during the period of probation. On successful completion of probation, the EMPLOYER shall pay the EMPLOYEE a basic salary of Rs. __________.
The EMPLOYER shall increase the basic salary of the EMPLOYEE as per the policy of the EMPLOYER.
PERQUISITIES & HOLIDAYS:
On confirmation, the EMPLOYEE shall be entitled to other benefits, monetary/leave, as is prevalent in the Company, from time to time, as per the ________________________(company norms).
Any dispute arising under this Agreement or any matter incidental thereto shall be submitted for arbitration as per the provisions of Arbitration and Conciliation Act, 1996.
IN WITNESS WHEREOF the parties hereto affixed their signatures on the day, month and year mentioned hereinabove.
SIGNATURE OF EMPLOYER
SIGNATURE OF THE EMPLOYEE
Also, Read: What is the Share Purchase Agreement in Case of NBFC?
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