What Is An Employment Contract?
An employment contract/agreement is a letter issued by the employer to a candidate who has been selected for a certain job offering a role in the organisation. This agreement is rather an elaborate document which not only offers and confirms the job, provides a breakup of compensation, but also describes the role and responsibilities in detail. Remember, the employment letter should be an extensive document covering all aspects of employment.
When To Use An Employment Contract?
- Statutory document at the time of offering employment
- To document employee – employment contract
- To lay out the terms and conditions of work
- To specify remuneration & other benefits
What Does A Contract Of Employment Cover?
- Designation & Role title
- Terms & Conditions of employment
- Remuneration Details
- Place and location of work
- Confidentiality clauses
- Reporting department
- HR policies
- Leave & Attendance policy
- Others
How To Make It Enforceable And Legally Valid?
Once you’re ready to print the document, follow the checklist below for an error free agreement.
Verify the content of the contract, ensure the clauses fall in line with the company policies.
Ensure the employee reads the pages thoroughly before signing. Address if there are any questions.
The employment contract should be signed by the authorized person on behalf of the company along with the employee accepting the offer. Retain a copy of this document and hand over the original letter to the employee.
Frequently Asked Questions
1. Is issuing an employment letter mandatory?
Yes, it is. It does not matter what industry you come from, issuing a detailed employment letter is mandatory as per laws. The document needs to be in accordance with certain convention and guidelines.
An employment letter is a vital contract that lays out employment terms and conditions signed by the employee after his acceptance which serves as a reference document in case of a dispute.
2. Is the employment letter valid if the employee did not sign it?
An employment letter is a form of contract that needs to be signed by the parties to it. If one or none of the parties provide their acceptance by signing, it will cease to be a valid employment contract.
3. I have been offered a new job by an MNC who have promised me an employment letter after 15 days of joining. I am confused. Should I join them and wait for the issuance of the letter?
An employment offer letter is issued before joining the company. Insist on one before onboarding. You must read the contents of the document and sign as a matter of acceptance. Reach out to the HR representative if there are any ambiguous clauses.
4. Should the employment offer letter be printed on a stamp paper of a specific value?
The employment letter needn’t be on a stamp paper. It is generally issued on the company letterhead signed by the official authorised signatory (Eg. HR manager, Managing director etc).
5. Is there any specification (upper or lower limit) in the number of leaves granted in a year for an employee?
Each State has its own rules, generally known as the Factories and Establishments Act. You can either lookup on the internet for reference materials or consult a legal expert for further information in this regard.
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