HR Policies

Employment Agreement – Overview

An employment agreement is an all-inclusive record on paper that discourses all clauses that govern the employment, as well as the rights, obligation, and responsibilities of the parties involved, concerning one other.

When hiring, an employment agreement contract becomes a mandate irrespective of whether the hiring is full time or part-time. Some of the probable points of an employment agreement letter comprise of salary break-up, joining date, notice period, and non-compete clause

What Are the Benefits of an Employment Agreement?

Certain benefits of an employment agreement contract are mentioned below-

Minimal Liability

A definite, well-devised clause in an employment contract format will keep things on the right path and steer clear from uncertainty. A well-drafted employment contract sample also minimises future legal liabilities.

Gives Assurance

Once the staff and the employer sign the employment contract, it develops a feeling of mutual respect. The employment contract also sets the responsibilities and obligation for the involved parties, making sure that both the parties are treated fairly.

Checklist for Employment Agreement Letter

A valid employment contract should include the following key provisions:

The Parties

The parties between whom the agreement will be executed (the employee and the employer) should be stated clearly. The details of both the parties (names, addresses, etc) should be mentioned.

Job designation & profile

The job designation and profile for which the employee is hired should be mentioned in the employment agreement. It will also include the duties and responsibilities for which the employee will be held accountable.

Remunerations and reimbursements

The remuneration to be received by the employee, instead of his services, should be mentioned clearly in the agreement. It will include the breakup of the salary components such as the basic salary, health benefits, travel expenses, PF contribution, etc due to him.

The agreement should also mention the reimbursement due to the employee for any expenses made while fulfilling his duties.

Leaves and other benefits

The contractual employment agreement must include a clause to specify the number of paid leaves the employee is entitled to during any given year and also how he can claim these. Other benefits the employee is due to receive (incentives, bonus, appraisals, etc) should also be mentioned in clear terms.

Confidentiality and non-disclosure

If the responsibilities and the duties of the employee put him in such a position where he comes to be aware of certain confidential information and/or trade secrets, the employment agreement needs to have an appropriate confidentiality & non-disclosure clause.

Termination of employment

The contract employee agreement should mention the process in which the employee or the employer can terminate the agreement. The terms and grounds on which the employee can be terminated should be mentioned clearly in the work contract agreement

Dispute resolution

The work contract agreement must mention the remedial measures the parties will resort to, to resolve disputes, if any. It will include alternative forms of dispute resolution they may choose to employ, such as arbitration.

General terms & conditions

These may include the obligations and rights of the employee and the employer, penalty conditions, and other important provisions applicable to both the parties.

Employment Agreement Clauses

• Variable salary component: This portion is dependent on the company earning enough profits during the year, and its willingness to pay a bonus to employees.
• Notice period: It is the defined time period that one must serve from the date of submitting the resignation letter, till the date of being relieved from the company.
• Terms of employment: Most companies do not allow their employees to carry out any other profession or business parallel to their employment.
• Non-compete clause: It legally prevents employees from offering their services, for a given period, to other employers working in the same industry or segment (competitors).
• Transfers & promotion policy: Details on the frequency of transfers within the company, and the basis of being promoted.
• Probation period: This is the time that the company takes to form an opinion about the employee, work ethic, commitment & willingness towards the job, etc.
• Additional allowance: House rent, travel, medical reimbursements, insurance cover, and other allowances are part of most standard employment contracts.

Employment Agreement Format

This agreement is between [organisation name] and [ name of the employee] of [city, state] and is dated as of the _____________ day of _____________ in the year 2022. The laws of [state or district] shall apply to this document as an employment agreement between the parties.

Since both the employee and employer retains the employee services the following terms and conditions are provided.

The parties accept the following terms and conditions IN CONSIDERATION of this shared understanding:

Employment

The underlined employee promises to take care of the tasks in the obligations signed by the employer to the best of their abilities in a faithful manner. At all times, the Employee shall adhere to all company policies, rules, and procedures.

Place

It is the Employee’s responsibility to carry out all necessary job functions and duties in their capacity as [job title]. The Employer may occasionally add additional responsibilities that fall under the proper scope of the Employee’s job.

Reimbursement

The employee will receive a wage of ₹__________ [per hour/per annum] in exchange for the services rendered, and their work will be the subject of [quarterly/annual] performance reviews. The payments should include all the employment deductions like taxes, social security and medical care.

Advantages

Any benefit programme that the employer offers may be enrolled in by the employee. At present the employer provides (list of benefits) only following the completion of the probationary period will access to these benefits be granted.

Probationary Period of Time

It is acknowledged that the initial [period] of employment serves as a probationary period. The employee will not be provided with any paid time off and other benefits during this period. During this time, the employer may also exercise its right to immediately and without prior notice terminate employment.

Paid Vacation Days

The following paid time off is available to the employee after the probationary period.

[Distance between vacation days] and [Distance between sick/personal days]

If necessary, bereavement leave may be granted.

Any policies relating to paid time off may be changed by the employer.

Discontinuation

Both parties want to establish a long-lasting, mutually beneficial relationship. This arrangement can be terminated by either of the parties at any time as long as the written notice is provided to the other party within the proper time duration. Upon termination, the employee promises to return all employer property.

Confidentiality and Non-Competition

You will have access to private information that belongs to the Employer as an Employee. The information will not be shared with anyone outside the company.

You are not permitted to work for any employer that is affiliated with or in direct competition with the Employer while you are an employee. Any other employment relationships you have must be fully disclosed to your employer, and you are free to look for other employment so long as it does not interfere with your ability to perform your job duties and does not put the employer’s interests in jeopardy.

Going ahead the employee acknowledges that they will refrain from approaching any of the clients of the employer for at least (required time period) post completing the employment.

Completeness

Any prior written or verbal agreements are superseded by this contract, which serves as the entirety of the two parties’ understanding. This contract employee agreement can be altered anytime with the return consent of the employer and employee.

Legal Permission

The employee certifies that as per the law the employee is fully authorised to work in (Country). The Employer will obtain this documentation for its legal files.

Severability

In the event of this agreement being determined or unenforceable the party agrees that the remaining provision shall remain in force and effect.

Judicial System

The laws of [state, province, or territory] shall govern this agreement and be applied in its interpretation and construction. With the Employee’s written consent and with due process, the Employer has executed this contract with the assistance of authorised company representatives in witness and agreement thereto.

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Employee Signature                                     Date

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Company Official Signature                       Date