Unfair Employment Terms - a must-read for employers


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What are unfair employment terms that every employer must know.
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Unfair Employment Terms - a must-read for employers

  1. 1. UnfairEmployment TermsWhat Employers MUST know? vakilsearch.com
  2. 2. In labour law, one of the commonest issues that crops up is a disagreement over the employmentcontract. If the disagreement is not properly handled, it could transform into a dispute. Hence it is veryimportant to carefully draft your employment contract so that the possibility of disagreements isminimized.Having said that, no matter what precautions you take, there is a possibility of an employee disagreeingwith you and claiming that his / her contract is unfair. And most often, they point to a few clauses whichinclude:SALARYRemember, a poor or low salary by itself does not amount to an ‘unfair contract’. It only becomes a legalproblem if it is below the minimum wage prescribed by law. In that case, you have to increase the salaryso that it is atleast equal to the minimum wage.The minimum wage differs from state to state and from sector to sector, so just check the relevantGovernment notification that applies to you to see what the minimum wage for your business is.Apart from the salary being below the minimum wage, you have to ensure that you do not discriminateagainst one employee for any reason. Discriminating against female employees on the ground of genderor against employees on the basis of caste or religion is a constitutional violation. If there is a difference insalary to different employees performing the same work, you will have to justify it on some reasonablebasis or else it could cause you legal trouble.BONDThe ‘unfair contract term’ most employees complain about is the bond. A bond essentially is a restrictionon the right of the employee to leave the employment for a specified period of time.A bond, depending on how long the period is, may be unfair. But it entirely depends on that period andwhat kind of investment has gone into training the employee, or what kind of investment the company hasput into the employee.If the company has invested heavily in the employee, a longer bond period may be reasonable. On theother hand, if the investment in the employee is low / negligible, then the Company might find it difficult tojustify any bond period at all.Often, and you find this even in Government bodies, a high bond period is associated with super-specializations. For instance, in many hospitals, the contract with super-specialist doctors stipulates thatthe doctors cannot leave for a considerable period (sometimes upto 8 – 10 years), justified by theinvestment in that doctor and the scarcity of super – specialists.Technology companies can justify bond periods for their engineers, and technology start-ups for theiremployees by showing that they incurred expenses in training and education of the employee. Rememberto keep the receipts and bills showing the expenses handy in case the worst happens, i.e. in case thematter goes to Court.
  3. 3. NOTICE PERIODA continuation of the discussion on the ‘bond period’ is the notice period. A contract may be unfair even ifit does not contain a bond period, but contains an unusually long notice period. For instance, if a contractstipulates a notice period of 8 months – 1 year, it is clearly unreasonable. A notice period of 1 – 3 monthsis reasonable in most cases.However, as in the case of the bond, no single rule or formula can be applied here either. In the case of acompany which has invested heavily in training an employee from scratch, it is entitled to insist on alonger notice period (of even upto a year) on the ground that it will need that much time to find areplacement and train the replacement.Unfortunately for companies in India, Courts are strongly in favour of the employee and are often unwillingto consider and understand legitimate business interests. But if it is properly set out in writing what thetraining and education of the employee will be, your case will be considered by the Courts.(This vakilsearch.com article was featured on yourstory.in)At vakilsearch.com, you can now get • Legal Advice for both businesses and individuals, on areas including • Service Tax, Sales Tax, VAT, GST, and other Taxation issues, • Company Law, • Intellectual Property (Patents, Copyrights, Trademarks, Designs and GI) • Property & Real Estate • Other Commercial Issues • Family related legal issues • Criminal law • Legal Documents including • Partnership Agreement • Non Disclosure Agreement • Terms of Service • Privacy Policy • Employment Contract • Consumer Complaint • Cheque Bounce Notice • Rental Agreement, (for your home / commercial establishment)If you cant find what you need online, or need some other kind of assistance or would like to speak to us in person, please feel freeto e-mail legalsolutions@vakilsearch.com or call +91 978 989 6023.