Knowledge Series Part 1 of 3
Part 1 – Employment Agreements – Key points to consider
- Job Description and Remuneration: Responsibilities of an Employee and terms of remuneration form the basis of an Employment Agreement. It is important that the Employee and the Company are aligned from the beginning on these points. Employee’s roles and responsibilities should be clearly set out along with work timings, reporting locations, and details of any other policies and guidelines of the Company. Terms of remuneration, increment, payment terms of any perquisites, incentives and bonuses should be clearly set out.
- Ownership of Intellectual Property: Intellectual Property is a key asset of a Company, given the fact that Employees are involved in the creation of, or exposed to intellectual property, the Employment Agreement should clearly set out terms of ownership of all intellectual property created by the Employee during his employment. Usually, such intellectual property belongs to the Company as such intellectual property is created by the Employee on a ‘work-for-hire basis’.
- Confidentiality: Details such as price list, client list, marketing plans, business plans, internal policies and agreements are important assets of a Company, disclosure of such information can cause great loss to a Company. Accordingly, every Employment Agreement should clearly identify confidential information and also set out restrictions on disclosure of such confidential information or use of such information for personal benefit. Procedure of return of confidential information at the termination of employment must be set out.
- Non-Solicit: A Company’s work force, its relationship with clients, vendors and third parties form the core of its business. An Employment Agreement should contain restrictions on an Employee during and after his tenure with the Company from soliciting employees of the Company or interfering in the Company’s relationship with its client and vendors or other third parties, so as to cause any such client, vendor or third party to change or terminate their arrangement with the Company.
- Representations: In several instances, a Company may be required to depute only such employees who meet a specific qualification criteria, breach of such requirement may expose the Company to fines, penalties or other claims. It is important that an Employment Agreement records the Employee’s qualifications and contains representations from the Employee that all information provided by him is accurate, authentic and he does not suffer from any disqualification of suspension.
- Termination: Terms of termination and resignation should be clearly set out in the Employment Agreement to avoid disputes with Employees. The Agreement should also set out the acts and formalities to be completed by the Employee at the time of leaving the organization such as return of confidential information, handover of information and documents, etc. The Employment Agreement may also set out certain eventualities, wherein the Company shall be entitled to terminate the Employment Agreement with immediate effect.
You can read Part 2 of this Knowledge Series – Contracts with Customers here.
You can read Part 3 of this Knowledge Series – Contracts with Service Providers here.
For more information about Employment Agreements you may write to us at:
solutions@bridgeheadlaw.com.
– Karan Narvekar | Partner
– Husrav Sukhia | Legal Trainee
Views expressed are personal to the authors and do not constitute as legal advice.
