7 Terms Employers Should Get in Writing from their Employees

People always ask me why lawyers make huge contracts for something as simple as hiring an employee. Is it to justify the fees? No!…. Well,… at least most of the time it isn’t. We try to ensure that employment contracts cover every possible scenario, so that there isn’t any ambiguity and any dispute between employer and employee can be resolved quickly and with the least amount of bitterness. Below are some terms you should get in writing from your employees. For new employees you can include these in the Appointment Letter or Employment Agreement and ask them to sign it accepting the terms. For existing employees you can just put these terms in the form of a letter addressed to the company and ask your staff to sign it.

 1) Non-Disclosure / Confidentiality Clause: You might not be doing any work that exposes the employee to any proprietary information, but a confidentiality clause is still important to protect details such as details of clientele and pricing.

2) Reference to Handbook/Code of Conduct: If your company has any handbook or code of conduct that is required to be followed by employees, the same is not legally binding on the employee unless he has accepted it in some way. You must take it in writing from the employee that he has read the handbook and that he will abide by it.

3) Non-compete clause: This clause bars the employee from joining or starting a competing business during the employment and for a specified time frame after the employment. However, the Supreme Court has held that restriction on post-employment non-compete must be reasonable for it to be enforceable.

4) Non-solicitation clause: This clause prohibits the employee from poaching the clients and employees of the company after her/his employment.

5) Outside Activities Clause: It may seem obvious that any full-time employee cannot take up any other employment on the side. But always good to have an express clause that prohibits moon-lighting.

6) Penalty Clause: Its always good to let the employee know what is penalty that he will have to pay to the company if he breaches any of the above clauses. However, the law on this is vast, and the courts may actually grant the employer an amount lesser than that mentioned in the agreement. But it’s a good clause to keep the employees on their toes.

7) Termination and Notice Period: There may be a fixed time for which the employee is not allowed to terminate the agreement. This clause usually comes in when the company is spending a lot on training the employee and it would not be feasible if he left the company within a few months of completing the training. Mention when termination is possible and what would be the notice period for the same (notice period must be reasonable). Also, mention that the employer can terminate at any time without assigning reasons. 

The above article is written by Vikrant Shetty of Taurus Legal.

Note: The above is provided for general informational purposes only and should not be considered a legal opinion of Taurus Legal nor relied upon in lieu of specific advice. We disclaim any liability that might arise from your use of any information contained in this email, as such information is not legal advice, does not contain legal opinions, and is subject to change.