Employment Contract

By: Legal Resolved


An Employment Contract is a legal agreement which define the terms and conditions of employment between an employee and an employer such as wages, duration of works, non-compete procedures, etc. They are usually signed and executed at the time of the inception of employment. There are majorly three types of employment contracts:

Ř Full time employment contract (FTEC)

Ř Part time employment contract (PTEC)

Ř Freelancer employment contract (FLEC)

Key Terms & Conditions of an Employment Contract

· Definitions and Interpretations;

· Acceptance of employee by the employer for the job and acceptance of job by the employee;

· Responsibilities and obligations involved in the job;

· Duration of probationary period and salary during that period;

· Salary including Basic, HRA, Medical Allowance, Education Allowance, etc;

· Status of job: Full time, part time or freelancers;

· Place of work;

· Date of starting and ending of job;

· Working hours in a day and working days in a week (for FTEC and PTEC) or assignment completion basis (for FREC);

· Overtime (for FTEC and PTEC);

· Payroll schedule: on a daily, weekly, biweekly, semi-monthly, monthly, per piece of work, etc;

· Refunds for calls, travels carried out in the course of employment;

· Holidays and Paid leaves in a year;

· Unpaid leaves and exceptions to it;

· Perquisites;

· Deductions;

· Required travels: once in a week, twice in a month, 10 times in a year, etc;

· Policies and standards;

· Confidentiality and Non-Disclosure;

· Non-solicitation which may hinder the company’s interests;

· Provident Fund

· Change in duties and remuneration would not make the present contract invalid;

· Prior notice to resignation;

· Termination of employment by the employer;

· Indemnification;

· Governing Laws;

· Dispute Resolution;

· Schedule A – Job description;

· Schedule B – Confidentiality and Non-Disclosure agreement.

Statutory Law References

Sec. 2(h) & 27 of the Indian Contract Act, 1872

Industrial Disputes Act, 1947

Payment of Gratuity Act, 1972

Industrial Employment (Standing Orders) Act, 1946

Factories Act, 1948

Payment of Wages Act 1936

Minimum Wages Act 1948

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Employees' Provident Fund and Miscellaneous Provisions Act 1952

Landmark Judgments

Diljeet Titus v. Mr. Alfred A. Adebare and Ors. 2006 (32) PTC 609 (Del)

Niranjan Shankar Golikari v. The Century Spinning and Manufacturing Company Ltd. 1967 AIR 1098

Desiccant Rotors International Pvt. Ltd v. Bappaditya Sarkar & Anr, Delhi HC, CS (OS) No. 337/2008

Important Do(s) and Dont(s)

· Contract should be signed and executed at the time of beginning of employment;

· Lawyer consultation or online legal advice should be the priority before executing such contract;

· Bond for a minimum time period of employment should be avoided as it constrains the employee to be with the company even if the work is contrary to his expectations;

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