Introduction
An employment agreement is the fundamental instrument which governs every minuscule aspect of the employer-employee relationship. It lays down the rights, duties, and expectations of the parties during the course of employment and beyond it. The following clauses form imperative components of an employment agreement:
1. Scope of Employment
This clause allocates a designation to the employee, enumerating their roles, responsibilities and obligations. It also contains details like office hours, mode of working and other specifications based on the employer's working model.
2. Remuneration and Benefits
Remuneration: specifies the compensation to be paid to the employee and the date of payment. A remuneration clause also includes tax deductions (if any) on the base salary, bonuses, medical and housing allowances, and determines the date of commencement of the period of continuous service, upon completion of which employees can avail government employment benefits.
Benefits: employees are entitled to several benefits like paid sick leave, vacation, parental leave and annual bonuses. In India, only working mothers are given 26 weeks of paid maternity leave in accordance with the Maternity Benefit Act, 1961, pursuant to the 2017 amendment. A progressive and inclusive policy at Zomato provides parental leave not only to working mothers but also to its male employees, stating: "We will be offering exactly the same benefits to men as well. There won't be even an iota of difference in parental leave policy for men and women at Zomato going forward."
3. Non-Compete
A non-compete clause aims at restricting the employee from providing assistance and services to direct competitors of the employer during the course of employment and, upon termination, for a stipulated period of time. Indian courts construe the validity and enforceability of this clause based on how it is used by the employer, and it must be used only to protect intellectual property, not to obstruct the employee's right to practise a profession.
4. Term and Termination
The term clause determines the date of joining and duration of employment, and specifies whether the employee is on probation or a permanent basis. The termination clause contains vital details on: termination upon the employee reaching the age of superannuation; termination on account of gross negligence or criminal and unethical activities; a stipulated notice period to be given by either party in the event of termination; and post-termination obligations, comprising delivery of material possessions by the employee, along with receipt of experience and relieving letters from the employer.
Conclusion
It is necessary to draft a tailor-made employment agreement that can survive all contingencies your organisation may face. The above-mentioned clauses, coupled with certain boilerplate clauses and other intricacies, can help facilitate a smooth employer-employee relationship.
Disclaimer: The content of this article is intended to provide general guidance on the subject matter. Specialist advice should be sought about your specific circumstances.