Employee agreement clauses and validity
Employee agreement clauses and validity
During the employment period, an employment agreement establishes the rights and responsibilities of both the employer and the employee. Everyone is an employee, from the lowest level to the CEO, and an employment agreement is required to strategize and systemize the employment. It clarifies the wage scale, incentive, leaves, working time, job roles, and much more for employees. An employee’s only legal instrument that can help him protect his rights as an employee is an employment agreement. An employment agreement might assist an employer in simplifying their workforce. This agreement serves as proof in the event of a dispute and as a source of legality to which both parties must adhere.
Execution of an employment contract?
An employment agreement must be signed in two identical copies, one for the employer and the other for the employee.
Can an employment agreement be enforced in India?
The Indian Contracts Act makes no mention of an employment agreement. Nonetheless, it is allowed in India as long as it does not place any undue restrictions on the employee. According to Section 27 of the Indian Contracts Act, an agreement in restraint of commerce is void only to the extent that it restrains trade. As a result, there is no absolute restriction, and it is only meant to apply to partial limits. The employer has an exclusive right to the employee’s services for the term of employment.
What are the main clauses and terms of an employment contract?
We’ve compiled a list of the most crucial phrases and conditions that should be included in the contract. Though this list is thorough, an employer or organisation can always add additional terms and conditions to protect their employer’s interests.
Parties– Both the employer and the employee are parties to the agreement, and both must sign it.
Location of Work- The place where the employee will be working should be specified in the agreement.
Effective Date– The effective date is the date on which the agreement takes effect; in this case, the employee’s joining date will be used as the effective date.
Working Hours and Job Timings- The agreement should explicitly outline the working hours and work timings.
Job Description- The agreement should contain the key responsibilities that the employee will be responsible for, as well as the job description that was included in the offer letter that was provided to the employee. Details about the department in which the employee will be working, as well as information about his trainer/reporting head, should be included.
Legal policy- The details of the public holidays and paid leaves an employee is entitled to within a year should be included in the leave policy.
Probationary Period- At the start of the job, a probationary period may be agreed upon. The probationary period cannot exceed six months. In a fixed-term job, the probationary period cannot be longer than half the duration of the contract. Employees are paid their regular salaries throughout this time.
Remuneration- The gross wage that is being offered to the employee must be specified in the agreement. Any salary deductions, such as taxes, insurance, and so on, must be indicated in the contract. The mechanism of reward payment must be agreed upon by both parties.
Notice Time- Both the employer and the employee must be given a notice period. Neither party should be authorised to cancel the agreement without cause, and the non-terminating party should be entitled to compensation if the agreement is terminated without cause.
Arbitration– To avoid ambiguity in the event of a disagreement arising out of this Employment Agreement or employment in general, the parties should state whether they will first resort to arbitration or not. Both parties must agree to reach an acceptable resolution, which can be accomplished through the employment of a well-structured arbitration provision
Duration- Every agreement, including employment agreements, must have a term. Employers, on the whole, keep fixed terms for their employees. Most of the time, it’s for a year, although it can be renewed.
Termination– Both parties have the right to terminate the agreement. The grounds for terminating the agreement should be stated clearly.
Non-disclosure and Confidentiality- No employer or organisation wants their sensitive information, such as trade secrets, financial information, or client information, to be shared with the public or with competitors. In order to prevent the employee from releasing the information, the employment agreement should include a non-disclosure and confidentiality clause. Separate non-disclosure agreements might be signed by senior executives or personnel who are exposed to the organization’s sensitive information.
Intellectual Property Rights- Every company invests a lot of time and money into training its employees, and as a result, they produce a lot of valuable business data. This information is the organization’s intellectual property, and it should not be misused by anyone. To prevent this, the agreement should include a paragraph saying that any intellectual property developed on the employer’s premises or by utilising the employer’s infrastructure belongs to the employer.
Jurisdiction– By incorporating a jurisdiction provision in the contract, the parties can explicitly identify which judicial court or forum will have the authority to decide any legal disputes between the employer and employee arising out of the employment agreement. A governing law clause in an employment agreement specifies the parties’ preferred legal system. Employment regulations differ from state to state, so it’s a good idea to spell out the set of controlling rules in the contract.
Non-competition Agreement- For the time period specified in the clause, the employee is prohibited from launching a similar business or joining another organisation with a similar business to that of the employer.
Is there any law that regulates employment?
The appropriate Shops and Establishment Act governs employment practises such as leaves, maternity leaves, working hours, and so forth. The Factories Act of 1948, the Maternity Benefit Act of 1961, the Payment of Gratuity Act of 1972, and other pertinent laws govern many elements of employment.
Is it necessary to get an agreement of employment notarized?
Although an employment agreement does not need to be notarized by a public notary, stamp duty must be paid on it. Because stamp duty rates fluctuate from state to state, they can be found in the schedule of the applicable Stamp Act.