What are the components of a standard employment agreement ?

An employment agreement is a document that specifies the responsibilities and duties expected of an employee. It also describes the profile of the job and the title. By law, the employer should provide employees with the terms of their employment. The document ensures that the employee knows his place in the organization and what is expected of him.

The following are the usual contents of an employment agreement :-

Name of the parties involved: The contract contains the name of the organization, the details of the organization and the employee’s full name and postal address.

The starting date: The exact date when the employment starts is mentioned. This is important for calculating most of the employment benefits. It is also useful in determining the experience accumulated by the employee, when, he applies for other opportunities.

The Title and Description of the job: The title and description should be clearly mentioned so that the employee is aware of what is expected of him. These usually follow the title and description mentioned in the recruitment advertisement.

Location: The location where the employee has to work is mentioned along with the right of the employer to change the location in the future. This allows the employer to transfer the employee to another location in the future due to organizational requirement or for other reasons.

Hours of Work: The timings of work are mentioned. The employee will usually have to agree to working beyond the 8 hours, provided, the number of hours do not exceed the weekly hour limit set by the concerned authorities.

Probationary Period: The employers can choose to specify a period where the employee will be monitored for performance. This also enables the employer to extend the trial period if necessary. The probationary period has a short notice period, where, the employee can be asked to leave if his performance is not satisfactory.

Salary: This is one of the critical components of the employment contract. The gross salary of the employee, the relevant deductions and the insurance are mentioned. It also mentions the actual date of payment.

Restrictive Terms: The agreement in some cases includes restrictive covenants and terms. This clause is intended to protect all information that are commercial and confidential in nature. The employee cannot set up business that directly conflicts with the employer’s business while working. The exact nature and number of terms will vary with the business and the employer.

Holidays: The number of holidays that the company offers in a year is mentioned along with the methods of reimbursement and related affairs.

In addition to the key components mentioned above, the contract can contain the details of deductions, the permissible expenses while on duty, sickness and disability policy, notice period etc.