2. Employment Agreement
• An employment agreement is a contract between an employer
and worker. It covers things like hours of work, rates of pay and
holidays. Every worker must have an employment agreement.
It is legally binding, which means if one side doesn’t do what
they’ve agreed to, the other side can enforce the agreement in
the court of law.
• All employment agreements must include certain mandatory
clauses. Minimum employment conditions which are not
specifically mentioned in your employment agreement are still
legally binding, such as entitlements to annual leaves, a
minimum wage and fair treatment.
3. Employment Agreement (contd.)
• It clearly specifies the salary, timings, the duties of the
employer, and also lists out your rights in form on Non-
Compete Clause, Protection of IPRs, which are all extremely
• Employment agreement and domestic help: Previously, the
practise was never there. But these days, everybody is aware
of their rights and they would prefer to have a written contract
specifying these rights. Moreover, there are many risks of
negligence which are possible, and a strong employment
contract will cover all such risks.
4. Compulsory benefits that an employer
needs to provide an employee
• If one has more than ten employees, the typical benefits one needs to provide
the following benefits to ones employee
• Social Security;
• Workmen's compensation;
• Old age pension;
• Maternity benefits;
• Provident fund.
• The three acts governing such benefits are Employee's State Insurance
Act,1984, The Employees’ Provident Funds and Miscellaneous Provisions
Act, 1952 and Payment of Gratuity Act, 1972
5. Termination of an employee
• As specified in the Terms, which is generally with 30
days written notice. However, all such firing must be
for a reasonable cause. If the employee has been
negligent, there should be sufficient evidence for the
6. Wage v/s Salary
• Essentially the same thing, wages are paid on a
weekly/daily basis and salary is paid on a monthly
basis. Normally, when you enter into Employment
Contracts, you pay salary to the employees. Salary,
moreover included bonuses, gratuity, contribution
towards PF, house rent allowance etc.
7. Laws related to the employment of an
• The Equal Remuneration Act, 1976 contracts for an equality
with which an employer treat his employees. As a general rule,
an employer needs to provide equal remuneration to women
and men for the same amount of work.
• The worker can work for a maximum of 48 hours per week and
9 hours per day. He is entitled to one day holiday every week.
• Minimum wages paid to an employees are governed by
Minimum Wages Act in India. By examining the details of ones
Employment one can one can determine the minimum salary
along with the benefits you are bound to pay your employees.
8. Laws related to the employment of an
• One cannot indirectly appoint casual labour to overcome
the labour regulations, there are restrictions on doing that
under the Casual Labour Regulation and Abolition Act.
The rules on Casual Labour will not affect your
9. Legal aspects of various terms of an
• Non-compete Clause: Ideally, a period of one year, the
employee may not compete with your business within a
certain territory, after the termination/completion of the
contract. In some cases, a restriction for a period upto 18
months has been approved.
• Bond Period: Courts have held it to be in Restraint of
Trade several times. However, that is not to say that a
bond is illegal in all cases. A bond of upto 18 months has
often been held to be valid by a Court of law.
10. Legality of an employment contract
• Strength of an employment contract: Extremely strong. A well
drafted employment contract is the key to a lasting relationship
between an employee and employer. It is, definitely enforceable in
court. If either party breaches any covenant, the other party can
• It is not mandatory to print an employment contract on a stamp
paper it is also fine if one prints the document on ones business
letterhead. If possible, one should do have it printed on Stamp
Paper. The moment one pays stamp duty on a legal instrument,
the same immediately gets legal sanctity and weightage in the
eye of law and the court of law will treat it a primary evidence
whenever a dispute arises between the two parties concerned.
11. Legality of an employment contract
• There is no requirement for registration of the
• In case of violation of any term of contract by the
employee: The first and the best step would be to, send
a legal notice. This is essentially a letter (signed by a
lawyer) informing him of his breach and that he is liable
to pay you compensation for the same.
12. Employees under employment contract
• Apprentice’s status as employee: An apprentice is a
temporary help, and there is no employer - employee
relationship between you and an apprentice. Apprentices
are also called interns or trainees.
• NRI/ Foreign Employees: There is something known as
an Employment Visa which he/she must obtain. If he
already holds a Person of Indian Origin card or Overseas
Citizen of India Card, that is not required.