Drafting an Indian Employment Contract the Right Way

Overwhelmed with where and how to start drafting employment contracts in India? You’ve come to the right place. In this article, we’ll cover the basics and fundamental features in an Indian Employment Contract.

3E Accounting is highly experienced in preparing employment contracts accordingly to your company’s needs.


But First, What is an Employment Contract?

An employment contract, as the name itself suggests, is an essential agreement whereby the employer and employee agree on a set of provisions. In other words, it is a legal binding arrangement between two parties on specific predetermined terms and conditions regarding work. Drafting employment contracts in India will help to lay the ground rules for you and your employee.


Why is it Necessary?

An employment contract is vital to both the employer and employee because it informs, educates, protects and ensures the security of both parties. By having a black and white agreement, employers and employees will be aware of their rights and establishments. Having a written contract will be substantial to avoid any misunderstandings or confusions that may occur in the future. Employment contracts will be beneficial in a case of legal battle, where any party that breaches the contract will be held accountable. Drafting employment contracts in India will help you to manage your future employees smoothly.


What Will the Indian Employment Contract Contain?

When drafting employment contracts in India, several factions need to be addressed to cover areas of responsibilities, benefits, salary, wages, duration of employment, confidentiality, absence, termination and just about anything regarding the work.


How Do I Begin Drafting an Employment Contract in India?

Easy. Have a checklist of the following:

  • Duties and Responsibilities of Employer and Employee
  • Working Hours and Leaves
  • Salary and Wages
  • Non-Disclosure and Confidentiality
  • Intellectual Property and Rights
  • Termination
  • Arbitration

(Feel free to add more clauses according to your needs).

When drafting an employment contract for a country, always keep in mind to do thorough research about its laws. In this case, on Indian laws, as it could even differ from one state to another. The Indian Law has enacted multiple legislation, such as the Industrial Disputes Act 1947 (ID Act), Factories Act 1948 (Factories Act), Maternities Benefit Act 1961, Disabilities Act, PoSH Act and Shops and Establishment Act and the Companies Act 2013. These are some laws created to define terms clearly, regulate policies and conditions, and to protect employers and employees alike. Next, make sure to check if the Indian state of your choice requires a duty stamp. If it does, then pay your stamp duty (not all states require them). Keep these tips in mind when drafting employment contracts in India.

When drafting the contract, always be considerate to all parties involved and be open in negotiating terms to arrive at a mutual agreement. Most people are often lost when faced with jargons. Therefore, be courteous in using such words.

Finally, consult 3E Accounting. Our team is highly experienced in preparing employment contracts accordingly to your company’s needs. Our team of trained professionals have a keen eye for details and will fine-tune your employment contracts. Contact us today and have your Indian Employment Contract ready in no time!

Drafting Employment Contracts in India