7 Major And Best Clauses Of Employment Agreement

Employment Agreement

What is an Employment Agreement?

According to the Indian Contracts Act 1872, an Employment Agreement commonly known as Contract of Employment is a mutual agreement for the transfer of service and payment over some time.

An employment Contract is that kind of contract for special service which the governments recognize as representing the social relationship of the company and employee as opposed to other connections.

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The basic features of this agreement are:

  • Consideration
  • Acceptance
  • Competent Parties
  • Offer
  • Legal Objects
  • Free Consent

An employment agreement or contract of employment also includes several terms and requirements to which both the company and employee are bound.

A violation of such terms or requirements shall lead to the cancellation of the agreement. These terms and requirements must be given to the employee before or at the time of signing off the contract so that he or she can understand the terms he or she is going to be treated by.

In standard agreement or contract, the negotiating people stand at equal status, but in this type of agreement, an employee is always at receiving and is certainly at the mercy of the company and cannot be required to maintain the equal bargaining power.

All employment contracts or agreements normally contemplate the employee not to disclose any private information and trade secrets.

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Employment Agreement
Employment Agreement

Important and Basic Clauses in an Employment Agreement

The requirement of the Employment Agreement

A written document declaring the requirements relating to the employment of a person builds a sense of trust within the person selected and the company or employer.

A carefully written employment document not only checks the liability of the business but also connects the connection between a company or business and employee.

This document also serves as important proof in case of conflict within the company and employee. This agreement serves as a source of rights to which both the parties are connected and prevents any discrepancy from the selected terms in case the company/ business or the employee breaks the agreement soon.

The agreement is specific yet comprehensive to address any variance and also involves the remedy in case of a violation of the agreement.

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Important clauses

  1. Title of the job offered: The status of the employee, his services, as well as reliability and responsibility, fall under this section. This data must be combined most accurately.
  2. Advantages: The more important the position a person takes in a company the more the profits are given to the real example requirement of an office car.
  3. Social protection benefits: Employee’s PF and security or insurance policies are the first important evidence of an employment agreement. It must comply with legal laws to make workers socially safe and allow them to do work without any trouble.
  4. Vacations and Leaves: This provision dispenses with some holidays granted by the organization including and not restricted to only government or public holidays. This requirement also includes sick leaves.
  5. Confidentiality: The company, most of the time combines this plan to secure non-disclosure of major trade and trade secrets of the company by the employee. This plan also continues in effect even after the time of employment to limit the dissemination of exclusive information of the company after they have left the company. Remedies such as command, compensation of damages, etc are also involved in this clause.
  6. Non-Compete clause: An employee is not forced to resign himself whenever he needs it because of getting some experience to begin on his own. There are some rules which are expected to be supported by him. This is why the clause declaring “Term” has been inducted and to avoid a warning to compete.
  7. Remuneration: The cost to be paid to the employee by the company for rendering assistance is to be specified in this clause. This clause must comply with legal requirements such as equal pay for similar work (remuneration act), smallest wages act, etc.
  8. Termination: The why, how, and when of the termination of the contract has been distributed within this clause. It must also cover the cases in which the company wishes to suspend the services of the employee or when the employee needs to resign his or her job.
  9. Reimbursement of Payments or expenses:  The employee while making his or her regular work may have to meet payments that are essentials for delivering the business objectives. The company shall be responsible to pay back such payments to the employee.
  10. Disability and Death: In various large companies in the case of the death of their worker or employee or in the event permanent disability of their worker often huge financial compensation or job possibilities to the family of the concerned employee is given. This clause includes the actions that would take place in such cases.
  11. Dispute Resolution and Support: The support and method of dispute analysis have to be defined in this clause in the state of a material violation of this contract.
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