The term Employment Agreement is not related to only Appointment Agreement but it is related to all those relevant agreements which an Employer shall ensure executing with Employee as this is a tool towards having your business in safe hands, secure place and this ensure the growth of your business. There is no doubt that an employee if join your company will for sure leave the company as it is his goal to reach some better opportunities or life and hence as an Employer it shall never come in between. There is no hidden fact that to make a business start and then to run and to make it grow, as an Employer, employer takes many hardships and it is only due to his regular and hard efforts that a business runs but is this only way to ensure business growth and if you think so, then you are actually not in the real market or say avoiding to understand the real fact.

This is also true that India is still a house to majority percentage of unorganised market but thanks to technology, things are changing fast but the problem still continues that there is still a mindset of saving legal costs which is making many organisation paid either in closing down the business or losing to competitors or losing customers or losing tenders, etc and others. The biggest mistake the employer does is not executing any employment agreements and not even appointment letter and then when the issues comes, they are almost with NIL contracts and nothing to put in proof but only argue on basis of various precedents which does no good for such employers as the battle is already lost. Let me share one real example of two organisations named as “A” having no agreements at all and “B” executed only appointment letters taken from website. A was in the business of Real Estate Brokering business and employed a person without any agreement and the salary was paid in cash most of the times. After 7 months wherein this employee got inside details of all about A, his customers, his way of dealing the customers, left the job within 2 days stating orally and A on knowing this issued the notice but there was no reply and this only hampered his business as this employee was given a good post in another similar market company and ultimately A had to close this business. This was the worst case happened when A met me for advice but he never believed in law and joined another company in same market as job seeker. Assume if all agreements would have executed and small legal costs would have been ignored, it would have saved A and strict legal action with less debate and more evidence could have filed against such employee and damages would have been claimed. The case of B was that an employee during employment in IT company booked the website for same services and then left the job and then started its own business with similar work. The only question to be proven was whether the domain booked was during the job or not and to prove this, the Relieving Letter signed by such employee in B came to great help to B and B won the case in India and also a claim from US courts worth 15 Crores under IP. This is the power of having correct and relevant agreements with the employees

Most of the employers or their HR has this habit of copy paste the documents from internet or take the documents online but they don’t realise that there is always a relevance of any agreement and any agreement cannot be executed unless there is no discussion about what they want and not and this hampers later. I would like to state as to Why It Is Dangerous To Avail “Online Business & Legal Services” in your Business or Else. There is no doubt that there are many online legal services offering services such as standard business templates, online business formation companies and or online legal services offering cheap services and forms and templates but what is the reasons that you should not use them?

You should consider these factors before deciding whether an online legal services company is your best choice:

  • They do not understand your strategy and there is no understanding consensus meeting and hence they are not in a position to analyze what type of entity is best for you. [Please note, that choosing the business type depends on your business strategy and plans and this is the most important stage as one has to know whether you are ready to take the risk in starting partnership firm where liability is limited or private limited company, where the ROC compliance are many and appointing CS or CA for this work becomes almost mandatory]
  • They do not discuss the levels of liability protection available to you nor how to conduct your business for maximum protection.
  • Their online applications do not discuss your business goals with you. [Please note that Business Plan and Business Goals are part of Business Strategy and hence everything has to be known to one person and one contact so that there is sync going one else for every work if there is no co-ordination the work will get its own interruptions]
  • If you do call to speak to someone on the phone, just who are you talking to and what do they know about Indian Laws and local laws
  • Will you get to speak to the same person each time you call?
  • You will not have the chance to see the form contracts they offer you before you buy them.
  • The contracts you buy from them will be one-size-fits-all and it may contain the provisions which may not be appropriate for your requirements
  • They will not advise you about the local regulations, such as trade license requirements, which may restrict your business operations or prohibit it altogether at the location you choose.
  • The information they request in order to prepare an agreement between multiple company owners is scant and is very unlikely to result in a very good agreement for you. And then, who will answer your questions?
  • They do not discuss your business succession or liquidation plan.
  • They don’t discuss of what is required or not in any affidavit or agreement
  • In regard to IPR, they don’t inform you what is the best way to protect your IPR [Please note, that each mark can fall under various classes and also may get in other IPR protection and each has its own specific purpose and this is not possible to close on one call and there is no way you can get one person at one call]
  • The list goes on and on and on.

It is all about your safety and your security and one small mistake either in commercial agreement from legal aspects or formation; it may ruin your whole idea of executing agreements.

The employer shall realised that in today’s generation doing business is good but not safe if proper agreements are not executed and hence the Courts gives clear direction when there are no documents to prove of you entitled to charge interest and hence you will find that in all the invoices, the interest rate and payment days are mentioned. Remember having the Lawyer in your business is an Asset and not liability if seen from long perspective.

An Employer shall ensure that they shall execute all the relevant agreements and for easy reference, just stating the utmost relevant contracts that an employer shall keep ready with them as a business standard template strategy so to as use and when the situation comes:

  • Offer Letter
  • Appointment Letter
  • Non-Disclosure Agreement
  • Non-Compete Agreement
  • Bank Performance Guarantee Agreement
  • Probation Complete Letter
  • Reliving Letter
  • Experience Letter
  • Confirmation Letter of Probation
  • Experience Letter
  • Increment Letter
  • Termination by Company
  • Do’s and Don’ts
  • Handover Sheet by Going Employee
  • Employee Leave Sheet
  • Absconding Employee Letter
  • Warning Letter for Employee absenteeism
  • Employee Hand Book

Please note that not one single standard templates works for all posts and hence here you shall speak to the Lawyer as to for whom you shall execute the agreement in different manner. Executing this contracts which is not exhaustive but it can be more depends on each companies criteria is relevant to ensure safety to your organisation and at same time even employee feeling a security of working with proper documentation as even they have to prove for getting PF and Gratuity dues.

It is no hidden fact that till date there are many traditional businesses second generation or third generation carrying their business but instead of taking the help of Legal professionals for executing agreement they prefer non-legal professionals and then use the same but you shall understand that each term and each para has its relevant and the importance of NDA and NC is of high utmost now a days in almost all businesses and the reason is that even a small list of customers is a trade secret and if this is not secured properly then you are in bad shape.

We hope that this Article will be useful for you to realise the importance of having agreements with employee and please note that for Business Growth, it is your duty to ensure safety and security to your business place and information and data and then checking mechanism on employees as if not, then be ready of you being in great danger. This call for Legal Audit as it is only under Legal Audit the gaps comes out. Legal Audit shall be done by Legal Professionals.

You can speak to us in detail in this regard, thanks and we wish you all the best

Author Bio

Qualification: LL.B / Advocate
Location: Navi Mumbai, Maharashtra, India
Member Since: 01 May 2020 | Total Posts: 44
I have been in Law Practice for more than 15 Years. My practice areas include: (a) Drafting of Commercial and Non-commercial Agreements/Contracts; (b) Recovery Matters before all Forums/Courts; (c) Arbitration and Conciliation; (d) Cross-Examination, Admission and Interim Stay; (d) Devising Strategy View Full Profile

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February 2024