Theme: Employment Contracts

To ensure that your rights as an employee in the private sector are protected, you must carefully read and understand the terms of your employment contract. It will not only mention the basic terms like salary and your job description but also provide further details of the rights and duties of both the employer and employees. Therefore you must always insist on getting a written contract and read it carefully before signing it as it will be hard to change any of the terms after it has been signed.

The terms of your employment contract will capture facts, rights, duties, and obligations that relate to you and your employer. These terms are based on your calibre, your expectations, your employer’s expectations, and industry standards. The terms are described with heavy legal terminology such as “non-compete”, “dispute resolution” etc.

It is important for you to conduct some research to understand what expectations you can have of your employer, if the expectations of your employer are fair, and if your contract is at par with industry standards.

Evaluate the Industry

When you are applying for a job or accepting a job offer, it is important to know industry standards of salaries, pay scales, and work practices. By understanding market trends and having knowledge of best practices, you have higher chances of getting what you rightly deserve from your employer.

Evaluate the Organization

Also, it is advisable to check the prospective organisation’s practices, work environment, treatment of employees, pay scales etc. Conducting such research will help you negotiate your contract better. You can find out such details from networking groups, ex-employees of that workplace, your batchmates from college who work there, colleagues of batchmates, etc.

Evaluate Yourself

Assess your skills and capacity, as it will help you negotiate the terms of your contract better. Your work experience, educational qualifications, relevant degrees/courses/certificate programs etc. will all add value to the position you can ask for as well as your salary.

All contracts start with the description of who you are, your role in the organization and details of your job. This is an example of how the first term of your employment contract would look like:

“XYZ Future Ltd. (“XYZ”), is hiring Abhinav Chandra as “Lead Architect” for a period of 12 months with effect from 15 February, 2019.”

Your Name 

In an employment contract, your name has to be expressly written. The names of the parties involved will be the first and most important detail in your employment contract. In the example given above, it is clear that XYZ is hiring only Abhinav for the job.

Organization’s Name

The official and proper name of the organization has to be in the contract. It should be mentioned that you are being hired by such an organization. In the example given above, it is clearly given that XYZ Future Ltd (“XYZ”) is the organization hiring for the job.

Your Employer’s Name

If you are being hired by an organization, then the name of the party hiring you would be the organization itself. Either the head of the organization or the head of human resources department (HR) will sign your contract on behalf of the organization.

If you are being hired by an individual, your contract will specifically have your employer’s name and only your employer will sign your contract.

For example: “Dr. Raj Sharma, is hiring Abhinav Chandra as “Lead Architect” for a period of 12 months with effect from 15 February, 2019.”

Job Description

The employment contract will have the description of the position you are being hired for and what the terms of your employment are, i.e. what you are expected to do. In the example given above, the job description for Abhinav is “Lead Architect”. His contract will mention that he is being hired for that post and will also include what his work as a lead architect would entail.

Employment Period

Contracts are usually either for a specific period of time or for specific tasks. The employment contract will state the period of time you are being hired for. In the example given above, the period has been specified as 12 months with effect from 15 February, 2019.

In some cases, employers might even add a probation period. This means that once hired, you will be on probation for a specific period of time. After the probation period expires, your employer will assess your work and capabilities and decide whether to confirm your employment or not.

Salary and Other Allowances

The contract has to specify your salary amount in numerals as well as in words. If you do want to modify this amount, make sure you do this before signing the contract as you cannot negotiate your salary amount until the contract expires. Keep in mind that you can ask for a raise in your salary based on the competitive market rates for your job position, if you have previous work experience or if you hold any degrees or certificates in higher education.

Some other allowances that may be mentioned in the contract or in the HR policy are:

• Relocation allowances, if you relocate to another city for the job provided by the employer.
• Reimbursement for any work-related expenses.

When an employer is willing to hire you and gives you a job offer, they must:

• Communicate to you about the offer
• Specify the job role and the terms of the job
• Offer some remuneration/salary/benefits in return for your work

Communication of the Offer

An employer has to communicate the willingness to hire you through a job offer in clear words, either in writing or verbally.

However, it is better to have the offer in writing, as it is easier to prove that the offer was indeed made, if your employer denies it in the future.

Job Role and Terms of Job

• The offer made to you should be for a specific position or a role. If the offer is unclear, clarify the kind of job role they are interested in hiring you for. It will be hard to get out of the job, once you have taken it and signed the written contract.
• Make sure that your job role, annual cost-to-company (CTC), benefits, monthly salary etc. are given. You should also clear up any doubts you have about the job details before you accept the offer.

Salary and Other Benefits

The nature of the job will determine your salary. Salaries are usually calculated based on the market rate for that particular job, previous work experience, and your bargaining skills. You can negotiate your salary by clearly communicating the advantage, in the form of your skillset, that you are bringing to the organization, and by utilizing your own market research regarding the salary as per industry rates.

If you are a salaried employee, your total salary will be broken up under different heads such as basic pay, dearness allowance (DA) , Provident Fund deduction, house rent allowance (HRA) etc. You will get your salary after deduction of tax at source. However, if you are not an employee, you will get your full salary amount, which is called a ‘retainership fee’.

After the job offer has been communicated to you, depending on your circumstances, you can always negotiate for additional benefits, a higher salary, or a better position. Your employer may or may not entertain such negotiations, in which case it is up to you to accept or reject the offer.

Timely Response to Offer

Your job offer may specify a time period within which you will have to reply and if you do not respond within the time given, the job offer will lapse. If there is no specific time period mentioned, you should reply to the employer within a reasonable time, either accepting or rejecting the job offer.

You will get a written employment contract only after you accept the job offer. The written contract will include all the details of the offer letter and more details provided by the employer. With a written contract you can exert the rights given to you under the contract. Further, you are bound by the duties given in the contract. The contract will establish:

• Your salary/remuneration.
• Your role and job description.
• The duration of time working with your employer.
• The employer’s responsibilities such as following the notice period while firing an employee, payment of salary etc.
• The employee’s responsibilities such as standard of performance of the job offered to them, following the work timings of the organization etc.
• Remedial processes if things happen to go wrong, for example, methods of resolving disputes etc.
• A list of all the things you are restricted from doing so that there is no conflict with your new employer. For example, non-disclosure, non-solicitation clauses.

Other purposes for which you can use the employment contract are:

• applying to banks for loans, or when filing your tax return, you can also produce the contract as proof of employment.
• renting a house or applying for any visa/passport application.

You should make sure that your contract covers all the important terms as it will be hard to add or change any term in your contract after you sign it.

Acceptance Only After Negotiations

Make sure that you finish all your negotiations for any change in the offer and only then accept the job. This is because once you accept the offer, your employer will think that you are accepting all the terms in the offer without any problem.

Writing an Acceptance Letter

While accepting a job offer from your employer, either do so by email or sign an appointment letter provided by your employer. This way it will be hard for the employer to dispute your appointment in the future and withdraw from it.

Time Limit for Acceptance

In some cases, your employer may ask you to reply with the acceptance of the job offer by email before a certain date, for example, the 10th of the month or by the end of the week. It is imperative that you respond to the job offer within this time period or the offer may lapse and the employer may offer the position to someone else. You will not have any recourse against this.

If your employer does not specify any time or manner of replying to the job, then:

• Use the mode of communication which does not cause delays.
• Reply within a reasonable time or the job offer may not be there anymore.

If you decide to reject the job offer, please make sure that you communicate it properly to your employer either in writing or in person or over the phone.

Before you are appointed, employers may ask you to submit some documents to check whether you are eligible for the job. Some of them are:

Documents from Old Employer

Relieving Letter (if applicable)

Your employer may ask you to get a signed document from your previous employer stating that you are no longer associated with them. This safeguards the employer from disputes in case a new employee has not terminated the agreement with the previous employer.

Work Reference

Your prospective employer may ask you for a work reference by either before the interview stage or after you accept the job offer. A work reference would usually be a contact you give of your ex-employer, who can verify and explain the quality of your work and your character while at work. The employer may ask for the reference in the form of a letter or they may contact the referees directly.

Payslips

Some employers ask for a copy of the payslip given by the previous employer to double check how much you were earning in your previous office to determine your salary in the new job.

Resume and Other Documents

Resume/CV

Your employer will ask for your latest resume or curriculum vitae with all the details of your work experience and education.

Educational Certification/Documents

For HR purposes and documentation of employees, some employers may ask you for proof of education such as school certificate, college graduation certificate, higher studies certificate, etc.

Identity Proof Documents

Government-Authorized Identity Proof

Most employers ask you for passport-sized photographs and a copy of the identity proof such as Aadhar, passport, driving licence, etc. for assurance of your identity and documentation purposes.

Police Clearance Certificate

Sometimes employers may ask employees to do a police verification to check for previous or existing criminal records. Some states, like Delhi, have this provision online. Otherwise, if your employer does not help you, then you may have to go to a police station yourself and request for the police clearance certificate from the police officer and submit it to your employer.

Documents for Salary Account

Bank Details

Your employer will ask either for your bank details or set up a new bank account for you, so that they can transfer your salary to that account.