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There is no mandate under Indian labor law that employment agreements have to be in writing but it is a market practice to have a written employment contract in order to ensure certainty and enforceability. Electronic signature and wet signatures are acceptable.
Some of the common terms of employment contract are:
- The employee's position and duties.
- Remuneration including other benefits such as bonus, provident fund contributions, and so on.
- Working hours, holidays and leave provisions.
- Term of employment (where applicable) and termination provisions.
- Provisions for dispute resolution in relation to key employees.
In addition to these required terms, the following agreements are understood to be included in the employment agreement:
- The duty of fidelity;
- The duty of confidentiality; and
- The duty to protect the employer's property.
If the employer wishes to change the terms of a workman’s employment, it must give the workman between twenty-one (21) and forty-two (42) days’ notice, depending on the state in which the workman works. The employee may object to the change before the relevant tribunal. For non-workmen, whether the employer may change the terms of the contract depends on the contract itself.
Fixed-term contracts are allowed and can be terminated simply by failing to renew them or for a reason specified in the fixed-term contract.
Prohibited or Inadvisable Terms
Any terms that violate general Indian employment principles will be void. These principles include restraint on free trade (post-employment non-compete clauses that are not part of the original employment agreement, for example) and that the contract must be for legal consideration and made with free consent on the part of both parties.
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