Employment Agreement

• Transparency - Employment agreement brings transparency in the organization in several aspects such as salary, provisions of termination, leaves, etc. There is a clear understanding between the Employer and Employee.
• Required during Legal Due Diligence: Employment Agreement is a mandatory document required at the time of Legal Due Diligence of Startups at the time of Fundraising.
• Legal action against absconding employees: Companies can easily take legal action with the help of employment agreement against absconding employees, theft cases, data privacy issues, against employees who left the organization without notice.
• Legal Labour Issues: Employment document is crucial and needed at the time of legal Labour Law issues between the Employer and Employee.
• Confidentiality Clauses: The Company can also choose to incorporate confidentiality clauses and non-disclosure in the agreement. It helps them to assure the protection of Intellectual property and deal with data privacy issues.

• Date and Place of Agreement - Date is the date on which the Employment Agreement was executed and the Place is the place of a signature, which is generally the registered office.
• Name of Address of Employer and Employee - Name of the Employer and theaddress is mentioned. CIN number of the employer is also mentioned. It should also have Name, Father's Name and the address of the employee.
• Designation of Employee - The designation or the position for which the person is hired. It should also include the roles and responsibilities of the employee. One of the most common provisions that should includeis that the employee is not allowed to work for someone else, either full-time or part-time.
• Remuneration and Benefits - Salary Structure, ESOPs, Variable, etc.
• Term and Termination - This clause comprises rules when an employee wants to resign or is terminated. It includes Notice Period, Termination with reason, and Termination without reason, probation period, etc.
• Confidentiality, Data Privacy or Non-Complete - It comprises clauses that are referred to confidentiality, non-complete, the privacy of data and non-solicitation.
• Conflicts, Dispute Resolution and Jurisdiction -It includes clauses that are helpful to resolve the future conflicts between the employer and employee.

Do's

• Execution of Employment Agreement should always be done on Stamp papers.
• In case, you are aware from the beginning that the employee will be working from varied locations or different cities, then you can try to exclude the place of employment in order to avoid any labour law issues.
• The employer should try to keep a consistent salary structure for all its employees, or at least for a band of salary. It avoids unnecessary issues that may arise due to the non-compliance of labour law.
• If an employer is issuing ESOPs as well, then the number of options are recommended to be included as compare to %age or amount.
• The employer should try to remove the subjectivity from the termination clause of the employment agreement by defining it clearly.

Don'ts

• Don't miss to get the agreement signed by your employee and clearly document it in hard copy.
• Don't miss to add this one particular line "All the employer contribution to taxes shall form part of the CTC"
• Don't miss considering the minimum wages law while structuring salaries for employees.
• Don't agree on jurisdiction as employee location.