When a company hires an employee, it signs an employee agreement. It is a legal agreement between an employer and the employee that entails all the details about an individual’s job profile. It also enumerates the terms and conditions of work. But, here, you must know that an employment agreement is not merely related to compensations and expectations. There is much more to it. Here we bring you an in-depth insight into the employment agreement and its various aspects. Let’s explore.
Types of Employment Agreement
1. Collective Agreement or CA- It is a binding agreement negotiated between one or more unions and one or more employers.
2. Individual Employment Agreement or IEA- It is between employer and employee. An employment agreement is offered by an organization that contains many essential aspects of employment. It is a kind of legal agreement that contains important aspects like salary, wages of the employee, public holidays, annual leave, sick leave, statutory legislation rights, etc.
Here we are enumerating some of the relevant terms that should be a part of the employment agreement:
- Appointment or acceptance of employee
- Location of employee
- Key job roles
- Remuneration like basic wages, bonus, and incentive
- Payment terms
- Termination condition
- Work hours
- Intellectual property
- Return of employer’s property
- Governing law
Key features of Employment Agreement
The Indian Contract Act, 1872, talks about Contract of Employment that has all the details of employment. It is a bilateral agreement that entails all the details of series and remuneration over a period of time. If you are preparing an employment agreement or going through one such agreement, certain features are a must in any employment agreement. These are must-have features, while the rest of the conditions vary from one organization to another.
The employment agreement contains various terms and conditions, in case of breach of any of these terms and conditions, it shall lead to the agreement’s repudiation. These terms and conditions must be mentioned in detail in the agreement so that both of them are aware of their work and remuneration.
Key Contents of an Employment Agreement
Here we will be explaining in-depth about the key aspects of the employment agreement. A copy of this agreement is with the employee, while the other is retained with the employer. Let’s explore:
● Parties of the contract- Both employee and employees must sign this agreement
● Date of start of work– The next aspect that you need to consider is that the employment contract must have the starting date of work
● Validity of contract-
o The validity of the contract entails the details that the employment will work, until he/she resigns from the services or is sacked by the employer
o An employer must give the justification for the reason of termination
o If the employment agreement is valid for the present, it means the employee has a permanent job
o If the employee is under the fixed-term, it means that the employee is with the employer for a fixed tenure
o The fixed tenure is mutually agreed upon by both the employer and the employee
● Place of work– The next feature that must be present in the employment contract is the place where the employee will be reporting for work
● Jurisdiction and Governing Laws– In case of dispute in an employment agreement, one of the parties may prefer to go for arbitration for resolving this issue. In contrast, the other party may go for the judiciary. Other parties may prefer to go in for the judiciary to adjudicate the matter.
● Job description– Another aspect that must be present in this agreement is the job description that entails all the details of the job that the employee needs to perform at a particular profile.
● Probation period-Every employee who joins an organization is first under the probation period. This period may vary from one organization to another. But, this period should not exceed more than six months. If the employment is fixed, then the probation period shall not be more than half of the employment contract duration. During the probation period, the company pays the remuneration.
● Working hours– The next important aspect that must be there in the employment contract is the working hours. These working hours must adhere to the Factories Act, 1948.
● Remuneration– Another key aspect that one has to see is the remuneration. It must be in black and white and must be mentioned in the agreement. Moreover, if there would be any deduction, then the agreement must have the details to show the conditions for deductions. The method of payment must be mutually agreed between the two parties.
● Period of notice– You must not miss checking the notice period. It applies to both employer and employee. The clause also shows what actions will be taken if either of the parties fails to adhere to the notice period’s condition.
Conclusion– This is mostly about the employment agreement. Most of the organisations have their legal team that works on curating the employment agreement. But, many companies have not outsourced these services to ensure that they have experts working on such legal agreements. If you, too, wish to create a flawless employment agreement, or if you wish to renew the same, this is the time to connect with the best legal firm.