Employment Contract Checklist – Must-Have Clauses for Employees & Employers

A well-drafted employment contract protects both employers and employees by clearly defining rights, responsibilities, and expectations. Whether you're an employer drafting a new contract or an employee reviewing an offer, this comprehensive checklist ensures you don’t miss critical clauses.

Why is a Strong Employment Contract Important?

✔ Avoids disputes by clearly outlining terms

✔ Protects confidential information (NDAs, IP rights)

✔ Defines job expectations (roles, performance metrics)

✔ Ensures legal compliance (labor laws, termination rules)

Employment Contract Checklist: Key Clauses

1. Basic Information

✅ Names & Addresses (Employer & Employee)

✅ Job Title & Department

✅ Employment Type (Full-time, Part-time, Contract, Probation)

✅ Start Date & Duration (For fixed-term contracts)

2. Compensation & Benefits

✅ Salary Structure (Gross, Net, Payment Frequency)

✅ Bonus/Incentives (Performance-linked, Annual)

✅ Allowances (HRA, Travel, Medical, Overtime)

✅ Provident Fund (PF) & ESI (If applicable)

3. Working Conditions

✅ Work Hours & Shifts (Flexi-time, Remote Work Policy)

✅ Leave Policy (Casual, Sick, Maternity/Paternity)

✅ Probation Period (Duration, Evaluation Criteria)

4. Confidentiality & Intellectual Property (IP)

✅ Non-Disclosure Agreement (NDA)

✅ Ownership of Work Product (Who owns IP created?)

✅ Non-Compete Clause (Restrictions post-employment)

5. Termination & Severance

✅ Notice Period (For resignation & termination)

✅ Termination Conditions (Misconduct, Poor Performance)

✅ Severance Pay (If applicable)

6. Dispute Resolution

✅ Grievance Redressal Mechanism

✅ Arbitration Clause (Avoids lengthy court battles)

7. Legal Compliance

✅ Adherence to Labor Laws (Shops & Establishment Act, Minimum Wages Act)

✅ Sexual Harassment Policy (POSH Compliance)

Special Considerations

For Employers:

🔹 Include a Non-Solicitation Clause (Prevents poaching of clients/employees)

🔹 Define Probation Extension Terms (Avoids ambiguity)

🔹 Mention Background Check Consent (For verification)

For Employees:

🔸 Check for Restrictive Covenants (Non-compete should be reasonable)

🔸 Clarify Variable Pay Terms (Avoid vague bonus clauses)

🔸 Ensure Termination Clauses Are Fair (No arbitrary firing)

Sample Employment Contract Template

EMPLOYMENT AGREEMENT.docx

Download DOCX • 18KB

Key Sections Included:

1. Offer Letter Terms

2. Job Description & Duties

3. Compensation Breakdown

4. Confidentiality & Non-Compete

5. Termination Conditions

Red Flags to Watch Out For

❌ Vague Job Descriptions (Leads to role misuse)

❌ Unreasonable Non-Compete (Overly broad restrictions)

❌ Unclear Termination Clauses (Risk of wrongful termination)

Final Tips

✔ Always Review Before Signing (Employees)

✔ Get Legal Advice for Complex Contracts (Employers)

✔ Update Contracts Periodically (As laws change)

Need a Customized Employment Contract? Consult a Labor Lawyer Now

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Have Questions? Ask in the Comments! 💬