7 Points Why Employment Agreement Is Needed

An employment contract is an integral part of running any business as it is the document that helps define your relationship with your employees. While awareness regarding the need and importance of such documents has increased manifold, there are still certain companies that do not employ such employment agreements. However, an employment contract is a vital document signed between the employer and the employee and helps define the working relationship. In this article, we will take a look at why an employment agreement is so important and how employment agreement contractors help with them.

What is an Employment Contract?

An Employment Contract is a legal document that binds an employee and his/her employer and defines the duties and responsibilities and terms & conditions. Therefore, it protects the best interests of both parties. It also helps in specifically listing out the duties and powers of the employee and what they expect their remuneration to be for the work they do. Similarly, it reminds the employer of their duties, the rights they must allow their employees, and serves as a guideline for both parties. An employment agreement contains details regarding both parties, the remuneration for the work, and details regarding sick days and leaves. 

Are employment agreements mandatory?

In some cases, employers and employees enter into verbal contracts. Drafting an employment contract might seem like a difficult task, and hence, certain employers try to avoid it. However, the best way to ensure that both parties are on the same page is to enter into an employment contract. Having an agreement in writing helps prevent misunderstanding and also serves as proof of the working relationship. Therefore, instead of relying on verbal agreements, both employers and employees must ask for written confirmation in the form of contracts. Also, drafting a solid contract is now effortless thanks to employment agreement contractors. These professionals help companies create contracts that are specific to their requirements. 

What does an employment contract include?

Most Employment Agreement contractors will include the following details and clauses in their contracts:

  1. Job information
  2. Compensation and other benefits
  3. Details regarding sick days, paid vacation, time off, and other leaves
  4. Employee classification and taxation
  5. Employment period
  6. A confidentiality agreement and NDA if required
  7. Technology privacy clause
  8. Termination terms and conditions
  9. Severance plan 

Why are Employee contracts necessary?

  1. An employment contract assures employees job security and certainty, which helps them plan for the future. The contract will explicitly detail the term of employment, helping them prepare for the future financially. Not only does this provide them with a guarantee of a job, but it also specifies the actions that can lead to termination.
  1. One of the most effective uses of such a contract is that it helps both the employee and the employer understand their duties. Ultimately this helps both parties understand precisely what is expected of them, helping them set appropriate goals and targets. Having an employment agreement in place also removes unnecessary ambiguities and misunderstandings, which may occur otherwise. 
  1. An employment contract is a vital document when it comes to protecting employee rights. It helps assure the employee that they will be treated and remunerated fairly and without discrimination. Hence, Indian law mandates that an Employment Agreement Contractor must draft such agreements following the corresponding Employment Act.
  1. It is the safest and best way to maintain a trade secret or confidentiality in the workplace. Most contracts nowadays have Non-Disclosure clauses in place to prevent employees from sharing crucial and sensitive information with others. As a result, such agreements help protect trade secrets and other client data. 
  1. Negotiating staff leave might become time-consuming and long-drawn later on. Therefore, the best option is to lay down all the rules regarding sick leaves and such in the employment contract itself. You can also mention clauses about special situations such as marriage and the birth of a child. 
  1. Another critical function of the employment contract is to help with dispute resolution. The contract lays down methods by which both parties can reduce conflict and resolve it if it arises. This not only helps in saving a lot of time but also helps the business build better relationships with its employees. 
  1. Clarity and certainty are two vital qualities that gain prominence when businesses use employment agreements. Not only does such a contract place a moral obligation on both parties, but it also helps prevent legal hassles and encourages commitment and teamwork. All these qualities are vital to running a good business as it helps the employees and employers work well together.

An employment contract helps build a good relationship between employers and employees. Additionally, it provides absolute clarity and depth to the working relationship and ensures that the best interests of both parties are protected. Hence, all businesses should try to put an employment contract in place to build a better workplace and promote teamwork!