Whenever a person joins a new firm, he is mostly asked to sign an employment agreement. But there are so many doubts lingering in the minds of people while signing it. This blog on FAQs- Employment Agreement helps you to have answers to many of those questions.
An employment agreement or contract is an agreement between the employer and an employee. It clearly states what the employer expects from the employee and in return, what it will provide him. An employment agreement safeguards the rights of the employee and, at the same time to an employer, an Employment Agreement can help in streamlining the Employees. This agreement comes to help in case of a conflict between the two parties. It also acts as a source of legalities to which both must adhere.
There are several questions that both employees and new entrepreneurs have regarding employment agreements. This blog, FAQs-Employment Agreement, is written with the sole purpose of answering the most widely asked questions.
1. What Is an Employment Agreement?
An employment agreement is also called an employment contract. It is a signed agreement between an employer and an employee. It has in writing the rights and responsibilities of both the employer and the employee.
2. Should Every Employment Contract Be In Written Format?
No, there can be a verbal contract too. But with it, you may find it difficult to prove the contract terms, if necessary.
It is advisable to have written evidence of vital contract terms. It will save you from any setbacks and regrets.
3. Are Employment Contracts the Same for Part-Time Employees?
Yes. Employment contracts are the same for part-time- employees. Part-time employees have the same rights as full-time employees.
4. What Happens if an Employee Refuses to Sign an Agreement?
If an employee has any problem with any part of the contract, it can be sorted out by discussions. The offer letter may be withdrawn if the prospective employee does not agree to the terms of the agreement and refuses to sign it.
5. What Are the Main Features an Employment Agreement Should Have?
The employment contract covers
- Job description: nature of job, responsibilities, to whom you report, etc.
- Compensation and benefits: The agreement should specify the salary amount, the frequency of payment, and terms of payment like, is it a fixed salary or does it include any commission, fringe benefits, etc.
- Schedule and duration of employment: The contract may include the number of days or hours per week an employee has to work. It may also include the time period the employee agrees to work for. It could be for a specific period or a minimum period of time, possibility of extensions, if any, may also be included.
- Confidentiality clause: The contract may include a statement on confidentiality that ensures that you do not disclose any confidential matter outside the company.
- Competition to the company: You may have a clause in the agreement that, on leaving this company, you will not take up any positions that will turn out to be a competitor.
6. Is It Alright if the Contract Says the Employer ‘Plans’ to Give Me Something?
You need to be careful when terms like ‘plans’ and ‘intends’ are used as it is not equivalent to a promise. If the contract says your employer ‘plans’ or ‘intends’ to give a bonus, it does not mean he promises it.
7. Is It a Problem if the Contract Does Not Include Everything I Was Promised?
In such a case, you need to be very careful. Many employment agreements contain a clause that the entire contract is written in this document. You are not to depend on anything said or done outside this agreement. This clause is also known as the ‘total agreement clause’, and ‘merger clause’. It clearly states that anything said and done outside this written agreement has no consequence, and becomes null and void. So, ensure that your contract has everything you rely upon before accepting the job.
8. Can I Make Changes to a Term in the Employment Agreement?
You can change the term in a contract if you have reserved the right to amend it and there is a need or a good reason for doing it. But, if you have no right to amend it, then legally, you should not make any changes without the employee’s consent.
If the changes benefit the employee, they may be introduced without bringing an amendment, for example, an increase in an incentive. When a change is introduced, the employees continue to work, and it can be considered that they agree to the changes even though a formal agreement does not happen. But, if they protest against the change and continue to work, it could lead to problems.
9. What Should I Do if an Employee Does Not Agree to a Change in a Term in the Employment Agreement?
You can issue a notice first and terminate the conract on completion of the notice period. Offer to take the employee on new terms of employment from the date of expiry of the notice period. This procedure ensures that you are not breaching the contract in any way. You may take the help of a legal advisor before doing it, as the employee may claim unfair dismissal.
You can prove that the dismissals are fair if you can show that the change was necessary for your business and the business need outweighs any disadvantage to the employee. You must explain the need for change to the employees and try to convince them.
10. What Is the Non-disclosure Clause in an Employment Agreement?
It is a legal clause in the employment agreement an employee signs before joining a new job or starting a new project. It stops the employee from making public any commercially sensitive or confidential information. The employee may have access to this information because of the nature of his work. He can neither share it with a third party or competitors nor use it himself.
11. Can the Employer Add the Invention Clause to the Employment Agreement?
Yes, the employer can add the invention clauses to the employment agreement. To avoid any ambiguities of ownership of inventions, it becomes necessary to include it. Some invention clauses need the employee to give all patent rights of any invention related to the company’s business or made on the premises of the company and during the company working hours. If the invention clause is not mentioned in the agreement, the employee can claim his rights over it.
Conclusion
By now, you must have understood what an employment agreement is and what it includes. It goes unsaid that, like all other legal issues, employment agreement also has complex terminologies to understand and points to be considered carefully. Hope this blog FAQs-Employment Agreement was helpful. Hence, it is advisable to take the advice of experts like vakilsearch for any of your queries.
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