What is a Contract Employee Agreement in India?

by  Adv. Priyanka Sampathy  




3 mins


Contract Employee Agreement in India


  • It is a legal document that is agreed upon by the employer of an organization and the employee who is going to work for the organization. This document states their roles, responsibilities, rules, and regulations to be maintained.
  • It is a binding document that contains the employment terms. The contract employee agreement in India ensures and states that both parties have a mutual understanding of their roles in this agreement.
  • The terms and conditions can be explicitly stated or mentioned in various clauses. The employer and employee needed to evaluate their consent while preparing a contract employee agreement in India.

Execution and Enforcement of the Contract Employee Agreement In India

  • The contract employee agreement in India is signed to systematize and maintain a positive training outlook. It can safeguard the employees’ interests in the future and can serve as legal evidence in case of any disputes. 
  • Any kind of conflict between the parties can be resolved with the help of legal consultancy services available online and offline.
  • There should be two identical copies of the contract employee agreement in India. One with the employer and the other with the employee to protect their rights and legality.
  • There is no mention of a contract employee agreement in the Indian Contract Act, but it is made and legally valid until there are no unnecessary restrictions on the employees. The employer can avail of the employee’s services only till their agreement ends.

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Terms and Clauses in an Contract Employee Agreement in India

There are standard terms and conditions or clauses present in a contract employee agreement in India that are acceptable. The companies may add any extra phrases according to their requirements and benefits. 

  • Signature of parties involved: The contract must contain the signature of both the parties, i.e. the employer and the employee.
  • Location of employment: The location where the company is located or the employee has to travel for work should be specified.
  • The date of effect: The contract employee agreement in India must specify the date when the employment term begins. It is a necessary clause to be input.
  • Timings and work hours: The contract employee agreement in India must mention the days, time duration, and how many hours an employee should be available for work. Any extra overtime hours are to be mentioned too to avoid any kind of lag.
  • Work description: The employee must be informed about the roles and responsibilities at the same as mentioned in the offer letter provided by the employer. The contract employee agreement in India contains the details of the supervisor/trainer/head of the department for which the employee is to be hired.
  • Leave terms and policies: The employee should be entitled to public holidays or certain leaves which are allowed within a year. This must be mentioned in the contract.
  • Probation clause: A probationary period of 6 months is agreed upon during the drafting of an employment contract. The employees receive regular remuneration during this time.
  • Salary and remunerations: The amount that the employee will receive for their service must be specified. Any tax and insurance deductions must be stated elaborately and bonus rewards are mentioned.
  • Alternative Dispute Resolution: The arbitration provision must be present to resolve any kind of issue that may arise during the employment term and process. This can help solve any ambiguity between the employer and the employee.
  • The specified duration: The contract employee agreement in India must mention a fixed term for the work of the employee.
  • Termination clause: The grounds on which the contract can be revoked should be stated thoroughly with the mutual consent of both parties.
  • Confidentiality and non-disclosure: This clause must be present as it is vital to safeguard the confidential and sensitive information. The employee must sign this or a separate agreement containing this clause where they are not allowed to pass sensitive data, client info, or secrets of the trade and company to anyone else or the competitors. Necessary action is taken if the clause is not adhered to. The parties may take legal consultancy services to avoid such circumstances and draft an employment Contract with specified clauses to build a safe base.

    Is Contract Employee Employment Legal In India? Talk To Lawyers Online Now & Find The Answer

The advantages of an Contract Employee Agreement in India

There are benefits of a contract employee agreement in India. These are:

  • Minimises the liability: The contract employee agreement protects the rights and roles of both the employer and employee. The terms and conditions mentioned in the agreement are mutually decided and agreed upon before entering a clause. The drafting of the contract employee agreement must be done thoroughly and revised to minimise the chances of future disputes and complications.
  • It provides assurance and security: The contract employee agreement in India helps both parties to build trust and respect in terms of work ethics. Their mutual understanding is necessary before the service starts and ends. The contract maintains fair treatment of both parties and evaluates their responsibilities accordingly.

Requirements to Make Contract Employee Agreement in India Valid

The requirements which make the contract employee agreement in India valid are as follows:

  • The parties must sign the agreement of their free will. No force or coercion should be involved during the preparation of the agreement as it can be charged under the law.
  • The terms and conditions mentioned in the contract must be reasonable and clear.
  • The restrictions and obligations imposed on the employee should be done to safeguard the company’s interest and confidentiality.
  • The agreement must be printed on a stamp paper of value deciphered by the law.

    Talk To Our Experts & Learn How To Use Contract Employee Agreement Effectively


The  Contract Employee Agreement in India acts as a mutual understanding between the employer and the employee for a fixed period of the term. This states all their duties and obligations towards each other and the company.

The company and employee can hire a lawyer online to draft their employment agreement for the better elaboration of each and every clause. This will help settle future disputes and avail benefits accordingly.

Adv. Priyanka Sampathy

Adv. Priyanka Sampathy


5 | 163+ User Reviews

Priyanka Sampathy is a legal consultant who prioritises ethical and professional conduct while striving to achieve desired outcomes. With over 15 years of independent practice, she has significant expertise in handling legal cases. Her exceptional communication skills enable her to express arguments in a clear and persuasive manner, both in writing and verbally, in Hindi, English, and Telugu.

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