Drafting an Employment Contract

Saptaparni Raha
Nov 29, 2022
3 min read

Written by Saptaparni Raha, Lawyer

Ashutosh joined a company. Goutam is the employer of that company. Goutam asks Ashutosh to sign an employment contract, but Ashutosh is confused about the same.

He went to Shweta Consultancy Services and shared everything.

Now, Shweta Consultancy Services help him understand the employment contract.

Introduction:

The employer and the employee of any company specify the length of the employee's employment through a contract known as an employment contract. This contract may be implied, oral, or written. This agreement can be drafted for any organization where an employer is hiring an employee.

Benefits of Signing this Contract:

This agreement helps in providing job security to the employee and ensures that involved parties will abide by the rules of the organization.

Important Clauses:

The first clause discloses the full name of the parties and the date of entering into the contract.
The Interpretation Clause mentions the confidential information, ensuring that employment by the company is following the terms of the agreement, mentioning the group of company, and the date of termination of the contract.
Under the Position Clause, the position at which the employee is posted is to be mentioned. During the time period of the agreement, the company may change the position or location of the employee.
The Term and Probation Period Clause mentions that the period of employment shall constitute the probation period. It shall ensure that after the probation period, the employer may decide to confirm the employment. After the probation period, the agreement may be terminated as per clause 12 of this agreement.
The employee must ensure that he/she must devote his/her full business time to business affairs.
The next clause ensures that the employees shall receive the annual salary, payable in monthly or more frequent installments. The amount per annum/month is subject to increase from time to time as determined by the employer. It shall also mention the mode of payment of the salary. The clause shall also ensure that all reasonable expenses shall be reimbursed.
The next clause mentions the obligation of the employee towards the company during the employment.
The agreement should determine how many leaves an employee can take.
The Assignment Clause ensures that the employee acknowledges that any work without-limitation inventions that the employee may individually or jointly conceive during the term of employment are "work made for hire" permitted by the law.
During the term of the agreement and one year after the termination, the employee shall not engage in any competing business.
The employee shall maintain all confidentiality regarding the company.
If an employee violates any aforementioned clauses, the company shall have the right to terminate the employee.
The Amendment and Termination Clause specifies the situation when an agreement can be terminated by providing a notice by the employer and the employee.
There must be some restrictions set by the company and mentioned under the Restrictive Covenants Clause that an employee must adhere to for three years of post-termination.
Any notice if that is to be delivered personally shall be sent to the pre-registered mail id. This mail shall be deemed to have been received on the 4th business day of the uninterrupted postal service following the date of mailing.
The employee has to indemnify the employer against all expenses that, include judgments, counsel fees, environmental penalties, etc.
Each paragraph of the agreement shall remain separate from and independent of and severable from other paragraphs.

Conclusion:

Thus, after all these discussions mentioned above, it is clear that the employment contract is necessary to establish the legal relationship between the employer and the employee.

References:

Anshruta Devnath, All you need to know about an employment contract (iPleaders)