Meaning of employee service agreement

Employee Agreement specifies the terms and conditions of employment of an employee in an organization. An Employment Agreement is not always fit for use by contractors. The contractors often use another legal agreement called Service Agreement.

When the employer and the employee enter into an agreement for employment on a contractual basis, it is called the contractual employment service agreement. The employee has to sign and agree to the terms and conditions of the employer. Such jobs are usually for a specified time and end after the assigned project/task is over.

In India, employment agreements having negative covenants are enforceable at law if individuals accept with their free consent, without fraud, coercion, undue influence, mistake, and misrepresentation. 

Services agreements are agreements (usually informal) between two or more parties and are sometimes enforceable at law. Contracts are formal arrangements between two or more parties that are always legally enforceable.

Significance of employee service agreement

A contractual employee service agreement issued to the employee is of great importance since the external party, the employee, works for a short period and holds a lot of confidential data, owing to the nature of the work and relationship. The document clearly outlines all the limitations, restrictions, terms, and conditions that the contractual employee must follow to continue the work.

Properly drafted, these agreements contain the necessary data required by law. They can also protect your position (particularly concerning termination of employment) and set out the employee’s role and duties for the benefit of all.

As the agreement is inclusive of all the rights and liabilities of both parties, it avoids future legal trouble and confusion. Its primary purpose is to serve as written evidence of the shared promises between the parties. As a result, it ensures that the parties will fulfill these promises. It is a legal document and may be enforceable in the Court of law. 

Essentials of an employee service agreement

It should consist of all the requisite terms and conditions. The following are the essential terms (among others) of such an agreement:

1. The relevant personal information of the parties such as full name, residential addresses, and ages of the parties to the agreement, 
2. Information related to the kind of job/employment,
3. Duties and responsibilities of and between the parties,
4. Salary and compensation clause including information regarding raises, benefits, incentives, etc. and any other consideration/ amount/payments/expenses/bills involved, 
5. Duration of the term of the employment/agreement, 
6. Penalty clause explaining the details of what the penalty would be if either party defaults in fulfilling its duties as per the agreement, 
7. Non-compete clause to stop the employee to immediately start a similar business or join any organization which could be in direct competition,
8. Non-disclosure and confidentiality clause concerning sensitive information that the employee may come in contact with,
9. Grounds and terms for termination of an employee,
10. General clauses such as termination of the agreement, relevant laws, dispute settlement/arbitration clause, intellectual property rights, etc.), and
11. Date of signing of the agreement.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.