Employment Agreement: Things You Should Know

Employment Agreement

In a layman’s term, an Employment Agreement refers to an official written agreement between a business or corporation (employer) and an individual (employee), which enumerates the span of the employee’s employment. However, the conditions of the agreement are set by what was coincided by the employee himself when they proclaimed their keenness to work. The agreement nonetheless identifies the rights, duties, and obligations of the employee and also the employer.


  • Span of Employment
  • Duties and explanation of their job
  • Policies about seeking for vacation and sick leaves
  • Policy and ground for termination
  • Points on life, health and disablement insurance
  • Non compete agreement/ clauses
  • Non disclosure agreement/ clauses
  • Agreement of ownership on manufacture or development of products
  • Patent terms produced by the employees during their span of employment


The predominant and the most basic purpose of an employment agreement is to furnish job security and certain beneficial insurances to the employee as well as confirmation to the employers from low productivity. This agreement also makes sure that both the involved parties would endure the rules and they would be willing to find effective ways to solve the dispute.


Here is a quick mention of what are the simple yet entailed benefits to not only the employer but also the employee after forming an Employment Agreement. The benefits are as follows:

  • Minimal Liability: An employment Agreement safeguards the rights of the employee as well as the employer. A well-defined clause in an employment agreement format will keep everything glowing, smooth running, and on the right path to keep away from precariousness. It will also avoid future liabilities, if only it is a well-built, strong Employment Agreement designed by the legal professionals at Vakil.Tech.
  • Assurance: Any type of legal agreement not only gives peace and stability to the employee but also the employer, the same applies to the Employment Agreement either.  Mutual respect and cooperation is developed once both the parties (employee & employer) sign the agreement.


  • The Parties: Parties to the agreement need to present I.e., Employer and the Employee; as well as their details like residential address etc., need to be specified.
  • Job Description & Profile: Details of what the employee is expected to perform and his position at the work place need to present in the employment agreement, including the obligations, duties and responsibilities for which the employee might held accountable.
  • Remuneration and Reimbursement: The “Remuneration” or wages that is to be received by the employee with respect to his job is to specified clearly as well as including of the details in breakup of salary such as the basic salary, travel expenses, health benefits PF contribution and such. It will also include “reimbursement” or indemnification owed to the employee for any expenses made while fulfilling his duties.
  • Leaves and others: The agreement must identify the number of paid leaves entitled per employee within a given year and also the procedure to claim such. Others like bonus, incentives and appraisals should also be mentioned in clear, simple terms.
  • Termination of Employment: The process on how to terminate the agreement by both the employer and the employee should be mentioned, along with the grounds and terms. Nonetheless, termination of an employee comes within the domain of several Employment Laws, hence, consulting a legal professional with the aspect is highly recommended.
  • Dispute Resolution: It must include Alternative Dispute Resolutions strategies which they may chose to employ like “Arbitration”.
  • General T & C: Must include the rights, duties and obligations of the employee and the employer and the penalty provisions as well.


Duties or responsibilities of the Employees and the Employers go hand in hand, however, employee do have certain specific responsibilities to be performed in the course of their employment.

  • To aptly do the work expectations for which they were recruited.
  • To be present at their workplace on time and to take it as a matter of discipline.
  • To refrain from putting others or themselves in any sort of danger.
  • To follow the instructions of their employer.

However, the employer (with the help of a legal professional) may any time send a written letter or notice to their employees if they are caught being lackadaisical enough or highly negligent or involving themselves in activities that may cause harm to the business or the factory.


  • Proper and hygienic place to work must be given along with required tools and equipment the work demands.
  • Employers must pay the salary of the employees on time including their incentives/ bonus/ appraisals (if any) and the paid leaves.
  • They have to make sure the environment of the workplace does not hamper the employee’s mental and physical health.

However, when the course of employment of any employee is ending, it is highly recommended for an employer to contact a legal professional to send the notice or letter of termination to the employee in order to keep it smooth.


  • Employment Agreement
  • Seeking leaves may it be casual, paid, sick or others.
  • Asking for salary to their employer (if not been provided).
  • Benefits of Maternity
  • A retirement benefit under the Payment of Gratuity Act, 1972 that is provided to the employees post retirement, resignation, termination or employee’s death.
  • Under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952 employees have the basic right to invest their salary in EPF, which should be transferred directly by the employer in the PF accounts.
  • A notice period of certain days has to be provided by the employer in case he wishes to terminate certain employee before his natural termination. In case the employee gets fired before being served a notice period, they should immediately contact a Labour Lawyer for their rescue.
  • Protection Against Sexual Harassment.


  1. The right to choose or select an employee.
  2. Right to pay remuneration.
  3. Right to regulate the method of working.
  4. Right of termination, suspension or dismissal of the employee.


  • Wrongful termination: Wrongful termination is an activity where the employer terminates or dismisses or removes an employee without providing any proper grounds, terms or notice period. In cases where a proper reason and grounds are not mentioned or informed to the employee, it is called as “wrongful termination”. In such a situation, the employee, with the help of a legal professional may send a legal notice to its employer alleging for the unjust and wrongful termination. If no response or actions are taken after that, the employee can surely file a suit at the Labour Court with the help of an attorney.
  • Withholding of salary: Withholding of salary of cheque happens when an employer refrains from paying its employee his entitled salary on time. To find a legal remedy to this, the employee shall approach the employee and enquire about the same at first. If no actions are being taken, the employee may approach the Labour Commissioner and a suit can be filed against the employer under Industrial Disputes Act, 1947. Please keep in mind, this suit has to be filed within a year from the day the salary or cheque is withheld.
  • Denial of employment benefits: Employment benefits like bonus, appraisal or incentives are nothing but an appreciation to the employee by the employer to encourage them for their work to keep doing better. Employment benefits are a matter of rights to the employee as well. In cases, where the employee is denied for its Employment Benefit, he can always write to the Human Resource Department (HR) of his company, at first. If the HR Department fails to settle the issue, the employee can then send a legal notice to the employer with the help of a Labour attorney asking the employer to pay his dues. If again the employer does not respond or refrains from getting the employee’s money, a recovery of damages suit can be filed at the Labour Court against the employer.
  • Denial of retirement benefits: Retirement benefits are termed as “gratuity” legally which is applicable in both public and private sector of jobs and are ensured under The Payment of Gratuity Act, 1972. Hence, with the help of a legal professional a suit for recovery of damages can be filed under the act.