Employment contracts play a vital role in any given business. To define it in simple terms, an employment contract can be described as a legally binding agreement between an employer and an employee. It will state all the terms and conditions of the employment so that both parties can feel safe about the deal. Employment contracts in India have become quite a useful trend. It’s advantageous to the business in many ways and we are going to talk about some of its major importance here: 

1. Labor Certainty 

The trend for employment contracts in India has increased due to fraudulent activities. Without contracts, there are all the chances that fraudulent activities might take place. It will specify the terms and conditions of the office to be maintained by an employee. This is an agreement which means that both the parties have happily agreed to what’s written inside it. If an employee wants to leave the organization, he would have to follow the norms suggested in the contract. It provides a labour certainty to the business which is a huge sigh of relief. If the labour turnover rate of a company is high, the business would never be able to function properly. 

2. Proper Delegation Of Duties 

If the employer has suggested some work to the employee today and the latter has agreed to such terms, it cannot be changed out of anywhere. If you’re going for employment contracts, there’s no way that the terms would be changed without the consent of both parties. The agreement would properly tell the employee regarding his work. The time duration and the work to be done would be written down in the contract. This proper delegation of duties is necessary as you cannot keep changing the responsibilities of the business as per their will. The duty assigned should be fixed and on the same terms as the main goal of the company. 

3. Confidentiality 

A lot of companies in India are worried if the employees would be able to maintain secrecy within the organization. There are some of the things that a company deals with internally and it doesn’t want to share such information with outside parties. It can be brand new business ideas that the company doesn’t want to share by any means. In case the ideas get leaked, the contemporaries might steal them which can prove to be a major setback for the company. When the employment contract is going to be signed by both parties, the business has got a chance to include the element of confidentiality and secrecy. In case an employee leaks any confidential information, the contract is going to mention the ways such an employee will get reprimanded. 

4. Resolving Disputes 

The need for employment contracts in India has risen due to increasing disputes between employers and employees. If there’s no contract involved and the two parties are not on the same terms regarding anything, the case might go to court. We are pretty sure that neither of the parties would like to waste their time in the hearing of the court. When an employment contract is signed, it will also mention the ways such disputes are going to be resolved without knocking on the doors of a court. 

5. Proper Leave Management 

The employment contract is also going to mention the maximum leaves that an employee can take in a given year. It’s important to pre-decide it as it will allow management to make plans and assign responsibilities to such an employee by the number of leaves. 

You must have seen an increasing trend in employment contracts in India. It has got a lot to do with the number of advantages it has got to offer to the business party. It also benefits employees in a big way as it gives them security regarding their work! 


The content of this article is intended to provide general information. No reader or user should act or refrain from acting on the basis of information written above without first seeking legal advice from qualified law practitioner.