Employment Contract: Everything You Need To Know

An Employment Contract Is An Agreement Signed To Provide Work To One Of The Parties To The Contract Called The Employee. The One Who Gives The Work To The Employee Is Termed The Employer. The Employment Contract Contains All The Terms And Conditions, Rights, And Duties Of Both The Employer And The Employee. A Contract As Defined In The Indian Contract Act,1872 Is An Agreement Enforceable By Law, An Employment Contract Is An Agreement Enforceable By Law Having The Purpose Of Providing Work Or Hiring The Employee.

An Employment Agreement Assists The Parties In Clearly Understanding All The Terms And Conditions Of The Employment And Significantly Decreases The Risk Of Disputes In Future. An Employment Contract Can Be A ‘Contract For Service’ Or ‘Contract Of Service.’ A Service Contract Is A Type Of Service Wherein The Employee Is Not Bound To Listen To All The Instructions Of The Employer Apart From What Is The Work That Needs To Be Done And Not The Way It Needs To Be Completed, Such As Independent Contractors And Freelancers. On The Other Hand, Under The Contract Of Service, The Employee Is Bound To Listen To All The Orders Of The Employer Related To What The Work Is And How It Needs To Be Done, For Example, The Employee.

Important Terms to be included in an agreement for employment

Information on salary and wages

The most important clause or information that needs to be included in an employment contract is the amount of consideration the employee will get and in what mode will s/he receive the payment, the date of the amount and any kind of deductions that can be done in return of several acts by the employee.

The working hours

The schedule of work or the total time that needs to be completed in a day or total days in a week on which the employee needs to work shall also be mentioned for clarity.


The period of employment shall be inserted in the employment contract as this clause indicates when the contract will terminate on its own if the contract is for a specific period. If the contract is for an ongoing period, it can be revoked or can be continued as usual. There can be such employment contracts where a minimum duration is specified which needs to be fulfilled and which can be extended as well.

Duties and responsibilities

The duties and the responsibilities of the buyer and seller are mentioned very clearly in the employment contract that shall be fulfilled by both parties.

Intellectual property rights

The rules regarding intellectual property rights (IPR) shall also be mentioned in the employment contract, in general cases, these rights reside with the employer and not the employees.

Benefits and allowances

An employment contract should also include all the benefits or any allowances such as vacation time, insurance etc. that the employee will be getting during employment and after the completion of the contract if any.


The clause relating to non-disclosure of the information, or the confidentiality clause is also inserted in an employment contract. In some cases, a separate non-disclosure agreement is also signed.

Future restrictions

The employer has the right to include a non-compete agreement or a non-compete clause restricting the employee to do work which will pose competition to the employer.

Dispute resolution

The clause of dispute resolution is always better to include in the agreement beforehand to ensure effective resolution of any dispute and resume working as soon as possible.

Apart from some of these important components of an employment contract, various clauses can be inserted as per the requirements of both parties to the contract such as the trial period clause if any. There are certain types of employment contracts, written employment contracts, and implied employment contracts.

Written Employment Contracts and Implied Employment Contracts

A written employment contract is the best way possible to start the employment tenure as this makes all the rules, duties, and regulations crystal clear and leaves no room for future disputes if the process is carried out carefully with the assistance of a legal expert. The employee should thoroughly read and think over all the conditions that may be present in the contract; trial period, and non-compete clause and decide accordingly.

An implied employment contract is one where employment is concluded from the actions, comments or in all communications made by the employee during the interview or promotion. It is comparatively difficult to prove an implied employment contract nevertheless it is binding on both parties.

Advantages and disadvantages of an employment contract and should you have an Employee Agreement?

There are certain advantages and disadvantages of having an employment contract, but the advantages are certainly more.

The duties and responsibilities are very clearly defined in an employment contract which can be used for specifications as well. This makes it easier for both the employee and the employer. An employment contract ensures the protection of both parties by inserting clauses in favour of both, for example, the non-compete clause in favour of the employer and the benefits, and job security for the employee. Stability is achieved with a written document as every responsibility is prewritten. The contract like all contracts is legally binding with consequences if breached, so usually, all the conditions are met as no one wants to face the consequences.

The binding nature of the contract, clearly demarcated rules, responsibilities, and benefits attracts more employees as they also get job security for a certain period or even more than that.

Along with these advantages, there are certain disadvantages of an employment contract as well such as the lack of flexibility, the binding nature may sometimes work as a drawback for both and the fact that if anything is to change in the contract it can only be done after renegotiating the terms. All these drawbacks can be avoided if due care is taken beforehand.

It is always advisable to make an employment contract along with all the advantages attached to it if in case there is a dispute in future having a written contract makes things easier to prove. An employment contract makes things smooth for both parties and if you are looking to hire a new employee, and you want your confidentiality protected, it is better to sign an employment contract.

Is it judicious to get your Employment Contract reviewed by a legal expert?

Having a legal expert by your side while you scrutinize the contract is the best decision you must make as you can get your contract reviewed by the lawyer which will throw light on many aspects that a lawyer can only point out, hence it is always better to review your contract with a legal expert.

In any case, if some changes are needed in the contract, the lawyers are good negotiators as well, and s/he can professionally put your contention before the employer or his/her lawyer and negotiate on your behalf.

Services Expertkhoj has to offer regarding Employment Contract

Expertkhoj as an online dispute resolution platform and a legal services firm has a complete panel of legal experts who have the expertise, the skill, and the experience to accomplish any task. They can help you irrespective that you are an employer or an employee as we provide services such as online legal consultation if there is a need to review the contract and agreement drafting services if a new employment contract is to be drafted. We also provide services relating to finding a lawyer online if there is some dispute regarding the employment contract.

Related Posts

August 25, 2017

Company Registration: Different Types of Companies in India

A Company In General Terms Means People Gathered For The Prime Purpose Of Doing Business And Earning Profits Having A Legal Identity. In Legal Terms, A Company Is Defined In The Companies Act, 2013 Under Section 2 (20) As “A Company Incorporated Under This Act Or Under Any Previous Company Law”. There Are Different Types

August 25, 2017

Registration of Partnership Firm: Advantages and Disadvantages

The Document Prepared In A Partnership Firm Is A Business Partnership Agreement Entered Between Two Or More Persons To Regulate The Business Responsibilities Within The Partnership Firm. A Deed Of Partnership Firm Is Generally Signed When The Parties Who Form The Partnership Firm Are Willing For The Registration Of A Partnership Firm, Not All Partners