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An Employment Agreement (or an Employment Contract) is an agreement that is entered into between the employer and the employee, which spells out the duration, terms of employment and the rights & responsibilities of the parties, i.e. the employer and the employee.
Especially from the business point of view, it is pertinent to enter into an Employment Agreement, in order to define the scope of work for the employee and to restrict him/her with the obligations such as confidentiality, exclusivity, indemnification and non-competition.
Contents of an Employment Agreement
A well drafted Employment Agreement addresses the following:
- What is the job description and what are the duties of an employee?
- What is the compensation structure and incentive scheme?
- What is the term of employment? Is there any lock-in period?
- What are the working hours and break intervals?
- How many and what kind of leave entitlements are there?
- How can the employment be terminated? What is the notice period?
- How would the intellectual property in the work done by an employee during the course of his/her employment be treated?
- Is there any non-compete and non-solicit restriction?
- What is the governing law and dispute resolution mechanism?
Laws governing the Employment Agreement in India
The different laws which govern various aspects of NDA in India are as follows:
- The Indian Contract Act, 1872
- Shops & Commercial Establishment Act (State-wise)
- Industrial Relations Code, 2020
- Code on Social Security, 2020
- Code on Wages, 2019
- Arbitration and Conciliation Act, 1996
- Copyright Act, 1957
- The Trademarks Act, 1999
- Patent Act, 1970
- Design Act, 2000
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Our standard deliverables for every document drafting includes:
- 30 Minutes of Talk-Time with the Lawyer for drafting/reviewing the Agreement
- First draft of the documents will be delivered to you within a maximum of 2 working days
- Post-delivery of the first draft – 2 Iterations per Document to incorporate your suggestions/changes
Frequently Asked Question
What is the importance of an Employment Agreement?
An Employment Agreement provides clarity to both the parties, i.e. an employer and the employee, as to the exact expectations of the job, compensation & incentive scheme, working hours & leave entitlements, termination mechanism, besides other important terms.
This kind of clarity helps to prevent disputes between the parties, and if in case there is a dispute, an employment contract acts as an evidence of employment arrangement mutually agreed to between both the parties.
Is it mandatory to enter into an Employment Agreement?
No, it is not mandatory.
However, even though there is no law that mandates the requirement of an employment contract, it is very important to enter into such an agreement, in order to provide clarity to the both the parties as to the exact expectations of the job in order to minimise the chances of disputes.
Does Employment Agreements required to be stamped?
Yes, just like any other contract, an employment agreement too requires to be stamped.
Does Employment Agreement contain NDA and non-compete clauses?
Yes, an Employment Agreement contains clauses such as NDA, non-compete, non-solicit and exclusivity, depending on your requirement.
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