This article has been written by Nihar Ranjan Das, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.
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At-will employment is a practice, by which an employer or the employee can terminate their professional relationship at any time without any reason. Though India does not generally recognize Employment at will, even if a clause is mentioned regarding the same, a show-cause court notice must be served to the employer and the employee can’t be directly terminated without any prior notice or information. Before getting into all details regarding the At-will Employment Agreement, we must understand closely the concept of an Employment Agreement.
Employment Agreement also termed as a contract of employment, job contract or employee contract. It promptly mentions the rights and responsibilities, details of the job duties, basic employment information and any liabilities of both parties.
However, India generally doesn’t recognize the process of Employment At-will. In accordance with the provision of ter Indian Contract Act, 1872 agreements which restrict the trade, business or the profession which are void, this could have an impact on employment bonds, and on non-compete and non-solicit covenants in employment contracts.
Rights and responsibilities of an At-Will Employee
As an At-Will Employee, even if you have done something illegal under the eye of law, you still can’t be fired. So the government to overcome those situations decided to make an exception in the rule of At-Will Employment.
For better understanding let’s discuss the above things with an example:
If an Employer is hiring pursuant to the federal and state law and prohibiting job discrimination, the employee can’t be simply fired for the reason of certain characteristics, such as race, religion or gender. Also, you can’t be fired for the reason that, you have complained about the illegal activity regarding the discrimination or harassment or anything related to health and safety violations at the workplace. You also can’t be fired for exercising any legal rights including to take leave for family and medical leave, to take leave to vote, etc.
Federal Exceptions in AT-Will Employment
The arrangement of At-Will Employment allows the Employer and the Employee to end their professional relationship without providing any reason, except the following conditions:
- Discrimination (42 U.S. Code) – based on race, religion, gender, age or natural origin.
- Polygraph Test (29 U.S. Code) – Employer can’t force or suggest the Employee to take part in any type of Polygraph test.
- Alien Status (8 U.S. Code) – it shall be based on their immigration status, the duration permitted to the employee to work in the United States.
- OSHA Requirements (29 U.S. Code Chapter 15) – any workplace safety violation or other hazards, which are reported to OSHA.
At-Will Employment Agreement
- This Part shall introduce the Employer and the concerned Employee, with the legal name of the Employer and the registered office address. Similarly it must introduce the Employee by mentioning the Employee’s full name and address.
“This AT-WILL EMPLOYMENT AGREEMENT (“Agreement”) is entered into on this ___ day of ________, 2021,
BY AND BETWEEN
_____________, a private limited company incorporated under the Companies Act, 1956, having its registered office at______________ (hereinafter referred to as the “Employer”, which expression shall, unless repugnant to the meaning or context hereof, be deemed to include all permitted successors and assigns),
_______________ son/daughter/wife of ___________ aged _____ years and residing at ______________________ (hereinafter referred to as the “Employee”, which expression shall, unless repugnant to the meaning or context hereof, be deemed to include all permitted successors and assigns). ”
Responsibilities of the Employee
This clause defines the specific responsibilities which shall be provided to the Employee by the Employer during the tenure of his professional engagement. The Employee may also assign various responsibilities from time to time as per the requirements. The clause can be drafted as below:
- The Employee shall report to the higher authority of his department and shall also be subject to the overall supervision and control of the Board. The Employee shall be responsible for the Position (for which he has been hired for);
- The Employee agrees to comply with various Employer policies, rules and regulations as may be updated from time to time unilaterally by the Employer.”
Duties and Obligation of the Employee
This clause shall include the activity, the Employee shall have to provide with respect to the best interest of the Employer. It may or may not be required for the Employee to present the best of his skills, experience and talents while performing for that specific position. The Employee shall also have to agree to adhere to any and all policies of the Employer during their engagement:
- The Employee shall work full time for the Organization, shall devote his time, attention and skill to the mentioned work of his project and shall faithfully, efficiently, competently and diligently perform such duties and shall exercise such powers from time to time and shall comply with all lawful directions given to him by or under the authority of the Board of the Employer and use his best endeavours to promote and extend the business of the Employer and to protect and further the interests and reputation of the Employer.
- The Employee shall do the entire act diligently and to the best of his ability while providing his duties and subject to any restrictions or limitations imposed by the concerned higher Authority or policy of the Employer in this regard.
- The Employee shall, unless prevented by ill-health or disability, devote his time, attention and abilities to the business of the Employer and shall faithfully serve the Employer and use his best practice to promote the interest of the Employer.
- The Employee shall at all times promptly provide all the information to his higher Authority and all such information, explanations and assistance must be as required by the Board in connection with the business of the Employer.
- During the term of this Agreement, the Employee shall not directly or indirectly engage himself in any other forum or business, occupation or employment whatsoever, without the consent of the Employer.
Compensation and Allowances
It must indicate the amount the Employee shall be paid on ‘per hour’ or per annum if it is an ‘Annual Salary’. In some instances, the Employer also provides few benefits, also known as the allowances to the Employee from time to time. The Clause can be stated like thus:
- In consideration of the services provided by the Employee to the Employer, the Employer shall pay to the Employee during the term of this Agreement, gross remuneration of (Rs. *****) per annum, with deduction of appropriate tax. This amount shall be paid to the Employee in accordance with the Employer’s normal payroll practices.
- Save and except as otherwise provided in this Agreement or as may be decided by the Board of the Employer from time to time, the Employee shall be entitled to get all such benefits as per the Employer’s policy for its management-level employees generally from time to time.
- The Employee shall be entitled to pay vacation, personal leave and sick days in accordance with Employer’s vacation and leave policies for its employees generally, as in effect from time to time.
- Notwithstanding containing anything contrary to such policies, the Employee agrees and accepts that he shall not have the right to carry forward any unutilized leave in a given year. The Employee however may be permitted to carry forward his unutilized leave with the prior approval of the Employer or the person in charge of managing Human Resources.
The Employer intended to hire the Employee “At-will”, which means this Agreement may be terminated at any time by any of the Parties (i.e., Employer and Employee). After Termination of this Agreement, neither Party shall have any obligation or duties as mentioned under this Agreement:
- “Employee’s Termination: The Employee shall have the full right to terminate this Agreement by providing at least 90 days’ notice period. If the Employee terminates this Agreement, he or she shall be entitled to severance, equal to their pay at the time of termination, till the completion of notice period.
- Employer’s Termination: The Employer shall have the full right to terminate this Agreement by providing at least 90 days’ notice. If the Employer terminates this Agreement, the Employee shall be entitled to severance, equal to their pay at the time of termination, till the completion of notice period.”
This clause shall mean and include that, all the information connected with the Employer and Employee shall not disclose by either party to person, except and otherwise it is strictly mentioned by the appropriate law to disclose the same to the authorized agent as per the rules and regulation. The Confidential clause shall not apply in the following cases:
- If the Confidential Information is in the public domain on the date of receipt of such information by the either party;
- If the Confidential Information is required to be furnished by any court or by order of any regulatory authority;
Non-Competition and Non-Solicitation
The non-competition clause shall restrict the former Employee from any sort of competition with the previous Employer during the fixed period as mentioned in the Agreement. Whereas the Non-Solicitation clause shall restrict the former employee from contacting the client or agent of the Employer for their own sort of use in search of business opportunities that are competitive with the former employee.
Settlement of disputes and governing law
- Any dispute, claim to arise out of this Agreement or any breach, termination or invalidity shall at first instance try to settle the same amicably through mediation carried out in good faith;
- if the negotiation doesn’t work out, then the Parties shall be settled through arbitration in accordance with the Arbitration and Conciliation Act, 1996 and the respective pleadings shall be submitted to a mutually appointed sole Arbitrator (or any number of Arbitrators which must not be an even number), who will resolve the issue in a fast track manner;
- The Arbitrator shall take a decision with a time-bound manner maximum of 12 (Twelve) months after considering only the written arguments. The decision awarded by the Arbitrator shall be bound on both the Parties. In case one of the Parties deliberately tried to delay and/or obstruct the Arbitration proceeding, the Arbitrator shall pass an ex-parte order, which would be enforceable on both the Parties.
- The seat and venue of the Arbitration is ______ (as mutually decided) and the Language of communication shall be in English.
If any provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other provision and such invalid provision shall be deemed to be severed from the Agreement.
This clause shall include all or any notice, approval, consent and or other notification required or permitted to be given hereunder shall be in writing in English and shall be delivered by email or registered post with postage fully paid to the address specified in the Agreement.
Unless it is specified in the contract or stated orally as the company policy, almost all the employment contract is considered as At-will. Most of the Employers actually point out appropriate conditions with their employee with various manuals and policies to make the employee acknowledge that they are an At-will Employee regardless of any circumstances.
The At-will employment also means that the Employer can terminate the problematic employees without going through the proper process of warning and notices, instead the employer can directly terminate the employee without any good cause during their engagement.
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