Professional Documents
Culture Documents
Employment Contract 1
Employment Contract 1
Introduction
The present era is experiencing phenomenal changes in the economy and
industrial processes, which has resulted in greater business competition. To
cope up with competition, the employers incur huge expenditure in
imparting training to their employees for improving the quality of goods and
services of the company. However, sometimes the employees leave their
employment after honing the skills & improving the knowledge of the
industry for better salary and incentives. The increasing rate of attrition
subjects the employers not only to financial losses but also delays in
completing the ongoing projects thereby directly impacting their goodwill &
reputation in the market. Therefore, in order to safeguard their interest,
employers have of late started to obtain an employment bond from their
employees who are found suitable for training or skill development. Such
employment bonds are agreements between the employer and employee
wherein among other terms & conditions of the employment, an additional
clause is incorporated which requires the employee to serve the employer
compulsorily for a specific time period else refund the amount specified as
bond value.
The question that arises here is whether such a method to retain employees
is effective, acceptable and enforceable under the law. This article discusses
the enforceability of employment bond and the rights available to the
employers and employees under the agreement in light of various court
decisions.
employer has incurred loss by such breach of contract. The court normally
considers the actual expenses incurred by the employer, the period of service
by the employee, conditions stipulated in the contract to determine the loss
incurred by the employer to arrive at the reasonable compensation amount.
For instance, in the case of Sicpa India Limited v Shri Manas Pratim Deb,8
the plaintiff had incurred expenses of INR 67,595 towards imparting training
to the defendant for which an employment bond was executed under which
the defendant had agreed to serve the plaintiff company for a period of three
years or to make a payment of INR 200,000. The employee left the
employment within a period of two years. To enforce the agreement the
employer went to the court, which awarded a sum of INR 22,532 as
compensation for breach of contract by the employee. It is crucial to note
that though the bond stipulates a payment of INR 200,000 as compensation
for breach of contract, the judge had considered the total expenses incurred
by the employer and the employee's period of service while deciding the
compensation amount. Since the defendant had already completed two years
of service out of the agreed three year period, the judge divided the total
expenses of INR 67,595 incurred by the plaintiff into three equal parts for
three years period and awarded a sum of INR 22,532 as reasonable
compensation for leaving the employment a year before the agreed time
period. Similarly, the High Court of Andhra Pradesh in the case of Satyam
Computers v Leela Ravichander,9had also reduced the compensation
amount considering the period of service of the employee.
Conclusion
Employment.
(a) The Company hereby employs the Manager as Showroom Manager of
_________ showroom. As such, the Manager shall have responsibilities, duties, and
authority commensurate with such position and will report to the Board of
Directors of the Company. The Manager hereby accepts this employment upon the
terms and conditions herein contained and agrees to devote Managers time,
attention, and best efforts to promote and further the business of the Company.
(b) The Manager shall faithfully adhere to, execute, and fulfill all policies, duties
established by the Company as described in paragraph 3 hereof.
(c) Manager shall not, during the term of Managers employment hereunder, be
engaged in any other business activity pursued for gain, profit, or other pecuniary
advantage if such activity interferes with Managers duties and responsibilities
hereunder. However, foregoing limitations shall not be construed as prohibiting
Manager from making personal investments in such form or manner as will neither
require Managers services in the operation or affairs of the companies or enterprises
in which such investments are made nor violate the terms of paragraph 4 hereof.
(d) The managers appointment is liable for re-location / transfer to anywhere in
India under the same organization or its branches on account of business work
exigencies.
2. Compensation. For all services rendered by Manager, The company shall compensate
Manager as follows:
(a)
Basic Salary. Beginning on the date of the execution hereof, the base salary
payable to Manager shall be _________ per month, payable on a regular
basis in accordance with The companys standard payroll procedures. On at
least an annual basis, Managers performance will be reviewed and increases
(b)
(c)
(d)
(e)
(f)
to such basic salary may be recommended if, in the discretion of the Board
of Directors of the The company, any such increase is warranted.
House Rent Allowance: The Manager shall be paid a House Rent allowance
at the rate of 40% of the basic salary.
Conveyance Allowance: The Manager shall be paid a Conveyance
Allowance of Rs. 800/- per month
Bonus: The Manager shall be paid bonus at the rate of ____
Commission: The Manager shall be paid commission at the rate of _% on
sales / purchases.
Perquisites, Benefits and Other Compensation. Manager shall be entitled to
receive additional benefits and compensation in such form and to such extent
as specified below:
(1) Participation in health, hospitalization, disability, dental and other
insurance Plans that the Company may have in effect.
(2) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Manager in the performance of Managers
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Manager upon submission
of any request for reimbursement, and in a format and manner consistent
with the Companys expense reporting policy.
(3)
(g)
3.
Taxes: The above amounts payable to the Manager are subject to the Tax
Deduction at Source (TDS) provisions under the Income tax act, 1981 as
applicable from time to time.
(c)
(d)
The Manager shall be incharge of the showroom and all other employees /
staff shall report to him.
The Manager shall be accountable for all the stock coming into, stored at and
going out of the showroom and shall maintain proper records as per the
companys standard policies and shall produce the said records as and when
demanded by the board of directors / auditors of the company.
He shall take proper care and follow the standard safety methods of the
company for prevention of any damage to the stocks of The company.
The Manager shall ensure apart from the companys stocks, only stock of
franchisees authorized by the board of directors by way of a board
resolution, shall enter the showroom and be allowed to be traded at the
showroom. If it is found that the manager has allowed any stocks to be
traded in the showroom without a proper board resolution, he shall be liable
to account for the sales and pay to the company, the profits earned on the
(e)
(f)
(g)
(h)
(i)
(j)
4.
said stocks. However the company is not liable for any losses incurred on
such sale. Further the company reserves the right to confiscate any unsold
stocks which are intended to be traded without a proper board resolution.
The Manager shall periodically verify the stocks put on display / stored in
the showroom by the franchisees and ensure that only the goods described in
the board resolution are being traded. If the manager notices any
discrepancy, he shall inform the board of directors immediately and
implement their instructions.
General Duties: Administering the day-to-day operations of the Company
and performing administrative functions necessary in the management of the
showroom, including the collection of revenues, the payment of the
Company's expenses, debts and obligations and the maintenance of
appropriate computer services to perform such administrative functions
Enforce discipline among the staff and ensure that the day to day operations
are smoothly conducted.
Furnish reports and information as may be required by the board of directors
from time to time.
The Manager shall ensure no illegal activities are carried out at the
showroom and bring to the notice of the board of directors any such
activities noticed by him.
The Manager shall advice the company about any changes that might bring
in economy / efficiency / improved margins, etc.
Non-Competition Agreement.
(a) The Manager will not, during the period of his / her employment by or with the
Company, and for a period of six (6) months from the date of his / her resignation /
termination for any reason whatsoever, directly or on behalf of or in conjunction
with any other person, persons, company, partnership, corporation or business of
whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner, joint venturer, or
in a managerial capacity, whether as an employee, independent contractor,
consultant or advisor, or as a sales representative, in any business selling any
products or services in direct competition with the Company or any of the
Companys subsidiaries or divisions, within 100 miles of the Companys principal
place of business or the principal place of business of any of the Companys
subsidiaries or divisions.
(ii) call upon any person who is, at that time, within the Territory, an employee
of the Company (including its subsidiaries) in a managerial capacity for the purpose
or with the intent of enticing such employee away from or out of the employ of the
Company (including its subsidiaries), provided that, after Employee has ceased
employment hereunder, Employee shall be permitted to call upon and hire any
member of Employees immediate family;
(iii) call upon any person or entity which is, at that time, or which has been,
within one (1) year prior to that time, a customer of the Company (including its
subsidiaries) within the Territory for the purpose of soliciting or selling products or
services in direct competition with the Company within the Territory;
(b) The Manager shall make good the losses if any incurred by the company by
breach of any condition in paragraph 4.
5.
Witness:-
Signatures
1. _____________________
1. ____________________________
2. _____________________
2. ____________________________