Important Features/ Clauses of Employment Contract

Employment Contract – An Introduction:

Whenever a company / organization hires a person to work for it / them, the hired person assumes the role of an “employee”,while the company assumes that of an “employer”. By hiring the employee, both the parties enter into a contract inevitably by mutually agreeing to the terms and conditions, either orally or otherwise. However, a written agreement i.e. Employment contract would enable both the parties to abide with the clauses accorded in the agreement. Further, they serve as a tool in creating an understanding between the employer-employee relationships.

Employment contract is a legal accord of the employment conditions, roles, responsibilities and the rights as agreed between the employee and the employer. Thus, the employment contract is an enforceable legal contract, which would not only serve as a tool to fulfill the legal obligations but also as legal evidence in case of any dispute.

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The employment contract differs based on the employment status of the employee i.e. (i) permanent employment, (ii) temporary or fixed time employment, and (iii) casual employment, freelancing or consulting, etc.Eventually, every type of employment requires its own obligations and hence the contracts must be crafted in a way to encompass all the required clauses and details.

Parts of an Employment Contract:

The main details and clauses generally to be part in the employment contract include:

  1. Employment details: this part should include the roles, responsibilities, designation, employment status and the job description of the job to be performed by the employee, working hours and days, etc.
  2. Remuneration details: Details on the income and pay rates including the bonus component, over-time remuneration (if any), salary revise details based on performance, etc.
  3. Probation details: Details related to the probationary time period, extension of the probationary period, evaluation of the performance during the probationary period, termination / confirmation based on performance during the probation period, etc.
  4. Performance measurements: Details related to the evaluation of the performance of the individual, frequency of the evaluation, metrics used for the evaluation, evaluation outcomes, salary revision process / appraisals, etc.
  5. Confidentiality clause: Required for the employer / employee to maintain the strict confidentiality of the job-related aspects, project and related process information, confidential details related to the company including the client details, cost details, etc.
  6. Employee leaving process: Protocols to be followed by the employer / employee, at the time when an employee leaves the company / organization including the notice period, knowledge transfers, restriction on employment with the competitors, etc.
  7. Intellectual property: Clear indication that any intellectual property created during the course of employment belongs to the company / organization, which will also serve as an evidence in case of intellectual property-related disputes.
  8. Termination: Termination of the employment based on the performance, disclosure of confidential information, failure to meet the expectations during the probationary period, etc.
  9. Dispute resolution: Resolving the disputes related to the employment through redressal systems, and dispute resolution means.

IPLF and Employment Contracts:

Most importantly, the employment contracts resolves to avoid the confusions and misunderstandings related to the employment and clearly states the expectations required out of an employee, which is accorded in a written document. Further, well drafted contacts protect the interests and rights of both the parties. Hence, it is highly recommended that a perfectly crafted employment contract is in before hiring any person as an employee.

Further, there are various clauses to be included in the employment contracts based on business obligations, which also requires legal prowess to draft a comprehensive agreement. Our team comprises highly skilled and trained legal professionals to assist in the negotiation and drafting of various types of contracts including employment contracts, which are not only mutually beneficial to all the parties involved but also protect your business interests.

Author: Govindhaswamy Srinivasan, a Principal Associate – Patents at Khurana & Khurana, Advocates and IP Attorneys.  In case of any queries please contact/write back to us at

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