While it is true that the employee has little or no bargaining power in the negotiation of these contracts, it would still be wise to be aware of your rights or the lack thereof.
In India, the private sector managerial employee is not covered by labour legislations. Since their jural relationship with the employer is governed solely by the employment contract, it is very important to carefully peruse the contract. While it is true that the employee has little or no bargaining power in the negotiation of these contracts, it would still be wise to be aware of your rights or the lack thereof.
1) Employment contracts often contain a non-compete clause that prevent an employee from joining a competitor post the termination of their employment. Such a restraint is known as a ‘post termination restraint’ and is illegal in terms of Section 27 of the Indian Contract Act, 1927. The Hon’ble Delhi High Court also reiterated this position in 1999, in the matter of Pepsi Foods Ltd. v. Bharat Coca-Cola Holdings Pvt. Ltd. However, if a payment accompanied such a restraint, the position may not be so clear-cut. This proposition is yet to be tested in the Indian courts.
2) Notice period is also a contentious issue. It is not unusual to have a clause that permits for termination of the contract, by either side, by a pre-determined notice period. Employees must understand that such notice is for a ‘no cause’ termination. It is also not unusual for an employer to retain the right of waiver of notice period, in lieu of salary. What this mean is that the employer could terminate the employee with immediate effect and give salary in lieu of requisite notice period. This might prove to be a difficult situation for the employee. Also special attention should be p a i d t o the manner in which ‘salary’ is defined. Often, employees are taken by surprise that notice pay only covers their basic salary and not their emoluments.
3) If the clauses on retiral benefits refers to a company policy, remember to insist on a copy of the policy. You may be surprised to find that the policy may have a minimum time period to be served before such retiral benefits become available.
4) The jurisdiction clause is also important from an employee’s perspective. It should ordinarily be the place the employee resides in. Else, the cost of travel to the location, where the company is located, could be onerous.