Oct 01,2019 | 15 min read

Employment Contract- Things to Know

Author - Associate Shereen Abdin

Employment contracts are the foundation for any organisation these days and assure a mutually benefited relationship. Firstly, an employment contract guarantees job security if you just started your career. It assures you and establishes whether the company is providing you with the compensation and bonuses, as promised. Therefore, it is important to read your employment contract before you acknowledge the document to voice for your rights.

An effective employment contract must cover the below aspects and make the employee thoroughly understand the terms and conditions of the employment.

Position Title and Description

It indicates the designation of the employee in the firm, his, and responsibilities to be performed on the job. An employment contract also reads, "Your roles may be changed during your employment according to the needs of the organization". It incorporates that the person is designated to perform the expected duties in his job and maybe allotted new responsibilities based on his capacity.


Salary decided for the employee must be explicitly specified in the contract agreement. The CTC fixed for the employee must be stated clearly and the monthly take-home salary split up must be specified clearly to avoid any ambiguity.

Apart from this, the mode of payment for the salary credit needs to be included. Besides, the currency of payment and the tentative date for receiving the salary each month must be mentioned upright.

Savings Contribution

Contribution to saving schemes such as EPF are mandated and should be recorded in the agreement. Unique credentials are given to employees to reach the sites and check the amount deposited in the schemes.

HR Policies

HR policies are a vital part of any agreement as it makes the employee aware of the policies and adheres to them strictly. These include your working hours, action against harassment, no of days of working and other benefits you are qualified. The company's policies are subjected to change and may be altered based on management. So, the employee is dutiful to adhere to the policies, if changed during their employment.


Some agreements may be created only for a specific time. These are fixed contracts and the time must be mentioned clearly. However, some contracts have a provision for renewal.

Termination/ Resignation

A typical agreement includes two types of termination. The first one grants rights for both parties to terminate the contract on the mutual agreement while the second one comes into action due to the misbehaviour of the employee.

Employment Contract

An employment contract defines the time the employee must mandatorily work for the company. In unavoidable situations, if the employee has to leave the company then he has to pay a fine to break the contract and leave formally.

Apart from this, the below clauses should also be considered on priority before legally signing the agreement.

Non-compete clause

It forbids the employees to work with competitors of the company after the termination of the contract.


A confidentiality clause is also a crucial part of the agreement. It defends the employees from unveiling the business information of the company to people outside the company.

Performance Review

It includes the cycle for performance review, either annual or half-yearly or quarterly. The agreement defines the time of the appraisal and the date the revised salary will reflect in your bank account.

Moral Clause

It is usually included only in senior-level management employee's contracts. It speaks about the behaviour of senior management employees and expected to be dignified and moral and not indulge in any illegal activities to maintain the reputation of the company. It may include professional ethics at work and the ability to deal with subordinates in a mannered way.


To conclude, it is indispensable for the employee to check if all essential clauses are added in the agreement. Relevant details like job nature, salary, leave benefits; incentives, bonuses, and place of employment should be given in the contract and verified by the employee, before signing to avoid any misconceptions.

In case off any doubts regarding the details in the agreement, it is encouraged to get it clarified to have a mutually profited relationship.

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Lawyered Team

Lawyered Team