Employee service agreement is a contract that is signed between an employer (individual or company) and a service provider (individual or corporation). Such an agreement is used to hire an individual or corporation in order to do a specific and defined task for such employer. It includes details such as the nature and length of job, the rate of services, confidential obligations etc.
A service employment agreement between an employer and service provider is an official record - capturing the essential information regarding the job/services to be provided and received between the said parties. Such an agreement officially records the specific terms of association between the parties. It consists of terms regarding the tasks/services - including details such as the nature of the job, length of employment, salary/compensation, confidential obligations, etc.
It is an important step as all the rights and liabilities of both the parties are stated clearly and thus avoids future legal trouble and confusion. Its main purpose is to serve as written evidence of the promises made between the parties, which in turn ensures that the parties will fulfill these promises. It is a legal document and may be admissible in the Court of law.
It should consist of all the necessary terms and conditions. The following are important terms (among others) that must be included in an agreement of this nature:
The relevant personal details of the parties such as full name, residential addresses and ages of the parties to the agreement,
Information related to the kind of job/employment,
Duties and responsibilities of and between the parties,
Salary and remuneration clause including information regarding raises, benefits, incentives, etc. and any other consideration / amount / payments / expenses / bills involved,
Duration of the term of the employment/agreement,
Penalty clause explaining the details of what the penalty would be if either party defaults in fulfilling its duties in accordance with the agreement,
Non-compete clause to stop the employee to immediately start a similar business or join any organisation which could be in direct competition,
Non disclosure and confidentiality clause regarding sensitive information that the employee may come in contact with,
Grounds and terms on which employee could be terminated,
General clauses such as termination of agreement, applicable laws, dispute settlement / arbitration clause, intellectual property rights, etc.) and
Date of signing of the agreement.
DRAFT OF EMPLOYEE-SERVICE-AGREEMENT
THIS EMPLOYEE SERVICE AGREEMENT executed at __________ on this the _______ day of ______________
BETWEEN
_______________, a company incorporated under the Companies Act, 1956 or Companies Act, 2013,represented by it's ________________Mr./Ms. _______________, son of / wife of/ daughter of Mr. ___________ having it's registered office at ________________________________________________, hereinafter referred to as the EMPLOYER (which expression shall, unless it is repugnant to the context, mean and include it's successors-in-interests, administrators and permitted assigns);
AND
Mr. /Ms. ______________, son of / wife of/ daughter of Mr. ____________, Indian, ______________, aged about _____________years, residing at ______________________________________________, hereinafter referred to as the EMPLOYEE.
WHEREAS
The EMPLOYER is carrying on the business of ________________.
The EMPLOYER called for applications from the eligible candidates for the post _________and in response thereto an application-dated ____________ was forwarded by the EMPLOYEE to the EMPLOYER.
On processing the application and the relevant documents, the EMPLOYER found the EMPLOYEE adequately qualified for the post and offered to appoint him as __________________________ in the Company.
The EMPLOYEE has accepted the said appointment on the terms and conditions herein after set out.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL OBLIGATIONS AND UNDER TAKINGS CONTAINED HEREIN THIS AGREEMENT WITNESSETH AS FOLLOWS
NAME OF THE POST:
The said EMPLOYEE is hereby appointed as ______________.
PROBATION AND CONFIRMATION:
The EMPLOYEE shall be on probation for a period of ________. The decision of the management on the performance of the EMPLOYEE during the period of probation is final and binding on the EMPLOYEE.
DURATION OF EMPLOYMENT:
On successful completion of probation, the EMPLOYEE shall be appointed as a permanent EMPLOYEE of the EMPLOYER for a period of ____________.
PLACE OF POSTING:
The EMPLOYEE shall report to work at ___________________, on ___________________.
HOURS OF WORK:
The EMPLOYEE is required to work from ___________ to ________ during the Weekdays. The weekly holiday would be on ________.
REMUNERATION
The EMPLOYER shall pay the EMPLOYEE a stipend of Rs. __________/- during the period of probation. On successful completion of probation the EMPLOYER shall pay the EMPLOYEE a basic salary of Rs. __________.
The EMPLOYER shall increase the basic salary of the EMPLOYEE as per the policy of the EMPLOYER.
PERQUISITIES & HOLIDAYS:
On confirmation, the EMPLOYEE shall be entitled to other benefits, monetary/leave, as is prevalent in the Company, from time to time, as per the ________________________.
ARBITRATION:
Any dispute arising under this Agreement or any matter incidental thereto, shall be submitted for arbitration as per the provisions of Arbitration and Conciliation Act, 1996.
IN WITNESS WHEREOF the parties hereto affixed their signatures on the day, month and year mentioned herein above.
SIGNATURE OF EMPLOYER
SIGNATURE OF THE EMPLOYEE
WITNESSES:
1.
2.
There are no specific documents required for the drafting and execution of an employee service agreement. However, ID proofs of the employee in order to confirm the personal details and permanent addresses of the employee shall be scrutinized. Moreover, papers evidencing the parties’ rights to be employed (as per the agreement) and provide the service(s) in question, could be examined. PAN card details may also be required to confirm financial/account details.
No set procedure is applicable in the making of such an agreement. However, once the agreement has been drafted by a lawyer, it should be specifically and carefully read by both the parties to the agreement. Any necessary changes required to be made shall be carried out and once the agreement is finalised, it shall be signed by both the parties. The said agreement has evidentiary value when it is printed on stamp paper and properly signed by both the parties(if State laws require such stamping). The stamp paper value (if relevant) depends on the particular State in which it is executed. Each party should thereafter keep a signed copy of this agreement between the employer and employee.
An employer could possibly be a company, an individual or a corporation employing individuals for specific duties/tasks to be carried out by such employees. An agreement of this kind is a legal document and the legality of such documents depends on the fulfilment of requirements as per the law, such as printing on a stamp paper of the correct value and signing of the agreement by both parties. The agreement can be modified or amended as per the terms of the agreement.
One of the first and the most important steps that you must undertake is to hire a good documentation lawyer, as he/she is aware of the nitty gritty of the legal procedures and necessary requirements involved in drafting of agreements between employers and employees. A lawyer would draft such an agreement, better than you can yourself, for obvious reasons. A lawyer has the necessary legal knowledge and experience to handle and draft documents. He/She will be able to guide you and draft for you according to your particular situation - the facts, circumstances, business risks and needs involved. A documentation lawyer is aware of good drafting technique and the clauses that must be included in your agreement. Even if you are an employee and have been handed over an agreement from your employer, it is best to hire a lawyer to vet/proof read the agreement before you sign, so that it is assured that your interests are not vitiated and it is not a one-sided agreement.
Hiring a good lawyer in order to draft (or vet/proofread) such important legal documents is a prerequisite and will help you in more ways than one.
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