Open-End Agreement

Open-End Agreement

An open-end agreement is an agreement between two parties, without mentioning the end date of the contract. By entering into these types of agreements, for example, a buyer can purchase the goods or services from the seller over some time without a change in the price or terms as mentioned in the agreement.

Open-ended agreements are also known as “Permanent contracts” that do not have an end date or end resolution to the contract itself then. Since there is no definite end date to the contract, the contract is left open for both parties. An open-end agreement will come to end if any one of the parties quits or is terminated by the other party as per the terms specified in the agreement like fraud, theft, etc.

In many cases, open-ended agreements are made out between a new employee and his/her employer, with no end date set as per the given in the contract.

Benefits of open-ended contracts for employees

• Employees will have job security, which can lead them to greater commitment towards the company.
• A long-term employee is an asset to any company. It minimizes the constant requirement of time spent on repeatedly training new employees.
• An employee who's in it for the long term is a better bet for important lengthy projects.
• A team of long-term employees is more cohesive and united.
• Potential employees may be more willing to apply for an open-ended contract position than for a fixed-term contract.
• Under this type of contract, the time spent by an employee under a single employer is ambiguous, leaving the employee free to continue to work in her job as long as their performance meets expectations.
• The main advantage of an open-ended employment contract is that employers don't have to repeatedly negotiate a new contract. Instead, they can use periodic evaluations of employees and meetings to make small changes to the already existing contract.
• Even if a contract does not indicate when the contract will end, certain conditions are deemed 'necessary' in the agreement, which means that the contract 's performance is based on these conditions.

Checklist Requirements of open-ended contracts for employees

• The big drawback to an open-ended contract is that no end date has been set. So once you have entered, you can not easily revert from the agreement.
• You can't quickly cut the workers to save money when times get tight.
• That can be a long, arduous process if you want to fire an employee.
• Employees recruited under this agreement may take their jobs for granted, and there is a chance that they will become less committed to work.
• If you need specific skills for a specific project, there's no point in recruiting someone for an indefinite period.

Types of Open-ended Agreement

Open-end leases make the lessee (the one who borrows the property, vehicles, etc) guarantee a value at the end of the lease which was promised. This is called the Guaranteed Residual Value (GRV) and it will be mentioned in the lease contract. The lessee has the option of purchasing, selling, or trading-in the leased property or vehicles at the end of the contract for the GRV.

Example

If the market value of the property is lesser than the GRV at the end of the lease, then the lessee is responsible for payout the difference, whether they plan to buy back the property or return it to the lessor. For instance, if the GRV is Rs 50,000 and the market value of the property is only Rs 48,000 at the end of the contract, the lessee will be responsible for paying the difference of Rs 2,000.

The open-ended tenancy agreement is an agreement between the tenant and landlord, and it will last until the tenant wishes to leave the let property

What are the particulars of an open-end employment agreement?

Before entering into the drafting process, collect all the required details about the employee, and clarify the same.

Initially, the agreement must state the details related to the employer like name, corporate name, residential address of the office, etc, and the employee details like name, date of birth, domicile, country, nationality, and, etc.

In this clause, it states that “Subject to the terms and conditions of this Contract”, the Employer hires the Employee and must mention the corresponding job role. And must describe the functions and duties of the employee.

The Contract should mention on which date the contract comes into force and shall remain in force for an unlimited term.

• The employee must perform the employment functions at the location of the Employer provided.
• The employer has the right to change the employee’s place of work to any other location where the employer may carry out business activities in the future.

Here, the employee’s normal working hours must be mentioned per day and per week basis like eight hours a day and 40 hours a week. And also, the exact working schedule like” from Monday to Friday, beginning at 9.am and closing at 6.pm, with a break of 1 hour for lunch from 1.pm to 2.pm.

During the probation period, which mostly consists of the first 30 days of the Contract, either party can terminate this said contract without giving notice or any compensation.

• The employee shall use, for professional purposes only, electronic devices, computers, information systems, and other services, including without limitation Internet access and electronic mail made accessible by the employer for the execution of the duties under this agreement.
• The employee shall not, during the performance of her / his functions under this contract or when using equipment supplied by the employer, use any databases and/or computer programs and applications, which are not duly licensed.

The Employee shall not engage with any other jobs and agrees not to indulge any services to third parties related or any of related Companies without the written consent of the Employer.

• The Employee acknowledges that all company, technological, financial, personnel and other information relating to the present or future company of the Employer, related or holding companies thereof, or holding companies, branches, affiliates or under the common control of any of them ('Related Companies') are important business secrets and employer confidential information.
• The Employee agrees to keep confidential all trade secrets and confidential information and not to use nor disclose any of such information for any purpose other than the compliance of this Contract and for the benefit of the Employer’s business.

This contract may be terminated:

• If anyone of them has indulged in either serious misconduct of the employee or the employer, subject to the adjudication of the competent court regarding the significance of the misconduct.
• Similarly, holding a legitimate reason and with a mentioned month(s) notice period may be given by the party initiating the termination.

The parties undertake to abide by the clauses and provisions of the open-ended agreement between the Employer and Employee formally declares that he is not contractually abiding by any other company, and is free from any contract.

What are the steps to prepare an employment agreement with Vakilsearch?

• Step 1: Our platform connects you to highly rated lawyers.
• Step 2: The first draft will be shared with you in four days.
• Step 3: Two rounds of iterations at no extra cost.

Documents required for preparing an open-end agreement

• Details like name, residential address, date of birth, domicile, country, etc from the employee
• Details of the employer like Name of the company or corporate, Head office address, etc.
• The agreement must be signed by both the employer ( official company seal and sign) and the employee.

FAQs on Open-End Agreement

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