THE INGREDIENTS (NON EDIBLE) –
- What am I here for? - Assess the nature of work and roles and duties of the prospective employee. This will decide their terms of employment. Hiring of independent consultants may be possible for services that are not indefinite and not normally performed by employees.
- How long can I stay? - Indefinite term contracts are most common i.e., employment at will. But other options are possible too e.g., employment for a fixed duration. Always evaluate the requirements of the role and position before deciding the length of service. Statutory notice periods apply for termination.
- Agreements come in all sizes - The employment agreements should reflect the seniority of the role; the most common classification is to separate employment contracts based on: junior to mid-managers, senior managers, CXO level staff and Directors on the board. Each level should have a specific employment contract to cater to the duties of the role and position.
- Let's talk money - Minimum wages and social security payments are mandatory and vary based on the location and nature of work: highly skilled, skilled, unskilled etc. Pension payments are mandatory; so are contributions for medical insurance, payments for bonus and incentives for long term service. Wages are agreed with the employee and commonly divided into various components (some of these give employees tax benefits). Statutory contributions are at times miscalculated; this has penal consequences.
- Trade unions - Certain types of industries (such as manufacturing units or factories) may recognise trade unions to represent employees; in such cases employment agreements will need to be calibrated based on collective bargaining agreements.
- Will you ever change? - Agreements can be modified by mutual consent, but some modifications e.g., to employee benefits or wages can only be completed by a statutory notice process.
- Do you speak my language? - Employment contracts are usually drafted in English; such contracts are binding. Most employees are likely to understand and accept English language employment contracts. Blue collar job positions or work sites in specific locations may require employment contracts in the local language spoken and understood by most employees.
- Hey! Don't touch my data - Express prior consent may be required required to collect, process and export personal data of candidates and employees; so, the individual's consent should be taken at the point when recruitment begins. Policies must also set out parameters required under law to protect personal data of all staff (employees, contract workers etc.)
- Government fees - Stamp duty is required to be paid on employment agreements; this ensures agreements are admissible as evidence in court in case of a dispute. The stamp duty is usually a nominal value and varies from State to State in India. The normal practice on paying stamp duty is not uniform.
WHAT ABOUT THE PAPERWORK
- Employment agreements (also called appointment letters) are mandatory; every employee has the right to ask for one.
- A foreign law agreement will not work in India. Similarly, foreign law templates won't work too.
- Sign, Seal, Deliver
Commonly employment agreements contain*:
- Conditions of working: Working hours, place of work, shift working, earned leave, sick leave etc.
- Duties and responsibilities of the employee.
- Rights about termination, probation and suspension.
- Duties of confidentiality.
- Intellectual property rights transfer and ownership.
- Payment terms and the break-down of wages and employment benefits.
- Data collection consent.
- Restrictive covenants and duty of exclusive service.
- Details of service rules and code of conduct.
- Miscellaneous provisions: Governing law, non-disparagement, e signatures etc.
*This is an illustrative list and non-exhaustive
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
