Everyone in Indian organizations must be aware of the different kinds of employment agreements valid within Indian law. Human Resource teams are a vital element in the hiring as well as contracting procedures for employees. As part of the strategic responsibilities that HR professionals play, it’s essential to establish the most appropriate type of employment contract and consider the length of the new contract and the pay rate to ensure that employees are being managed efficiently. Learn more about the various types of employment contracts available within India.
1. Fixed-term contract
Fixed-term contract employees in India are treated the same way as permanent full-time employees. A fixed-term contract is a relationship between the employee and the employer set for a specific period of time determined in advance. This type of contract can be terminated when a particular task is finished or a specific event occurs. A worker isn’t considered an employee if their agreement is with an agency they are employed in instead of a company. If a person has fixed-term contracts for more than two years, they have the same rights to redundancy as an employee with a full-time contract would be entitled to. This contract legally gives fixed-term contract employees additional security.
2. Part-time or full-time contracts
Permanent employee contracts are the most commonly used type of employment contract and status for employees in India. Employers have to give their employees an official statement of employment or an agreement that should contain at least a statutory minimum of paid holidays. A contract should include the terms of work with the rights, conditions, responsibilities, and obligations.
Both parties are entitled to end the contract. A contract can be terminated either by the employer or employee in writing or by the dismissal of the employee.
3. Agency staff or temporary employment contract
Employers may hire temporary employees through an agency to satisfy an immediate need or a short-term increase in demand for your services or products. Employers must inform the agency regarding the terms and conditions of the company so that they can provide the worker with terms. Temporary workers at agencies should be provided the same terms and conditions as permanent employees after 12 weeks.
4. Zero Hours Contracts
Zero-hour employment contracts typically cover work or tasks that need to be performed on an irregular basis. This means that workers could be “on-call,” and the employer has no set or defined number of hours to offer. Employees who work for zero hours have the right to annual statutory leave. The agreement is usually only for employees to be at your disposal when you need them, and workers don’t have to work when requested, but only when they are available.
5. Self-employment contract
A self-employed person isn’t an employee of the company they work for but instead operates on their own and is accountable for the performance or failure of their own company. If an organisation is constantly working with a self-employed worker, they can be referred to as self-employed since they are accountable for defining their job responsibilities. They may employ their own equipment or assets and can choose the work they want to perform and how often they do it.
6. Employment contract for interns
An intern can be considered a volunteer, worker or employee. If interns perform regular tasks, they can be regarded as employees and receive employment rights. If they are considered a worker, they’ll be eligible to pay the National Minimum Wage. Voluntary workers don’t get paid. Students who are required to complete an internship in their higher classes do not have the right to a minimum wage.
7. Apprentice Agreement
An apprentice must sign an apprentice agreement that provides details about the skills, the trade or profession that the apprentice is being trained for, as well as the amount of training the apprentice will be given. The agreement also outlines the terms and conditions followed during the training. Anyone over 16 years of age who is not currently enrolled in full-time education is eligible to be in an apprenticeship.
Ensuring Legal Validity of Employee Contracts
Both parties are legally bound by the contract. In order to ensure that the most sought-after employees are hired on time without waiting for them to be snatched away and to avoid potential legal liability, it’s essential to sign contracts as soon as possible.
Electronic signatures enable employers to send contracts electronically and have them signed on time. E-signatures are quick, easy to use, and even secured better than conventional signatures since they have traceable information of the person who signed the document.
The most important thing is that using an electronic signature ensures a faster turnaround time, allowing companies to secure highly skilled employees quickly.
Remotely authenticated employees might particularly benefit companies with remote employees. An employee can sign a contract online from anywhere in the world with just the click of a button, which is a vast improvement on the antiquated printing-mailing-scanning process. An e-signature is a sign that an original copy of the contract is accessible online for review and cannot be lost or misplaced.
Advantages & Disadvantages of Contracts
Writing a contract is one way of limiting liability for implied contracts. Utilizing a template for a work contract can be an effective management tool as they set out expectations right from the beginning to avoid confusion in the future. It is also possible to secure company information using non-compete clauses that prevent employees from selling trade secrets to a competitor’s business.
Although there are some drawbacks, such as increased documentation or a more significant risk of liability in the event of a breach, the benefits are clear. Before signing a contract, both parties must be confident that they can meet the conditions they agree to. A good contract will guarantee the continuation of employment for employees as well as a specific supply of workers for employers.
An employment contract may include an obligation to keep confidential information private. This clause can prevent employees from sharing sensitive information regarding their employer. These agreements are becoming increasingly popular, particularly in the tech, finance and pharmaceutical sectors.
Employers in these industries can also stipulate that the business, not the individual, owns all “intellectual property” created during the employee’s time. It is important to remember that these contracts don’t expire when the employee quits the company. They are in effect for the rest of their lives.