What are unfair employment terms that every employer must know. (You can now prepare a fully customized employment contract at http://www.vakilsearch.com/employment-contract)

1. Unfair
Employment
Terms
What Employers MUST know?
vakilsearch.com

2. In labour law, one of the commonest issues that crops up is a disagreement over the employment
contract. If the disagreement is not properly handled, it could transform into a dispute. Hence it is very
important to carefully draft your employment contract so that the possibility of disagreements is
minimized.
Having said that, no matter what precautions you take, there is a possibility of an employee disagreeing
with you and claiming that his / her contract is unfair. And most often, they point to a few clauses which
include:
SALARY
Remember, a poor or low salary by itself does not amount to an ‘unfair contract’. It only becomes a legal
problem if it is below the minimum wage prescribed by law. In that case, you have to increase the salary
so that it is atleast equal to the minimum wage.
The minimum wage differs from state to state and from sector to sector, so just check the relevant
Government notification that applies to you to see what the minimum wage for your business is.
Apart from the salary being below the minimum wage, you have to ensure that you do not discriminate
against one employee for any reason. Discriminating against female employees on the ground of gender
or against employees on the basis of caste or religion is a constitutional violation. If there is a difference in
salary to different employees performing the same work, you will have to justify it on some reasonable
basis or else it could cause you legal trouble.
BOND
The ‘unfair contract term’ most employees complain about is the bond. A bond essentially is a restriction
on the right of the employee to leave the employment for a specified period of time.
A bond, depending on how long the period is, may be unfair. But it entirely depends on that period and
what kind of investment has gone into training the employee, or what kind of investment the company has
put into the employee.
If the company has invested heavily in the employee, a longer bond period may be reasonable. On the
other hand, if the investment in the employee is low / negligible, then the Company might find it difficult to
justify any bond period at all.
Often, and you find this even in Government bodies, a high bond period is associated with super-
specializations. For instance, in many hospitals, the contract with super-specialist doctors stipulates that
the doctors cannot leave for a considerable period (sometimes upto 8 – 10 years), justified by the
investment in that doctor and the scarcity of super – specialists.
Technology companies can justify bond periods for their engineers, and technology start-ups for their
employees by showing that they incurred expenses in training and education of the employee. Remember
to keep the receipts and bills showing the expenses handy in case the worst happens, i.e. in case the
matter goes to Court.

3. NOTICE PERIOD
A continuation of the discussion on the ‘bond period’ is the notice period. A contract may be unfair even if
it does not contain a bond period, but contains an unusually long notice period. For instance, if a contract
stipulates a notice period of 8 months – 1 year, it is clearly unreasonable. A notice period of 1 – 3 months
is reasonable in most cases.
However, as in the case of the bond, no single rule or formula can be applied here either. In the case of a
company which has invested heavily in training an employee from scratch, it is entitled to insist on a
longer notice period (of even upto a year) on the ground that it will need that much time to find a
replacement and train the replacement.
Unfortunately for companies in India, Courts are strongly in favour of the employee and are often unwilling
to consider and understand legitimate business interests. But if it is properly set out in writing what the
training and education of the employee will be, your case will be considered by the Courts.
(This vakilsearch.com article was featured on yourstory.in)
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