Frequently Asked Questions
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A written employment contract should be executed between employer and employee as a best practise and a written appointment letter should be given to employee and it should include the following terms of employment and it must be duly acknowledged and accepted by employee.
- Name and address of the employer and employee;
- Date of employment
- Designation and job responsibility.
- Job location;
- Working hours
- Salary details (Fixed & Variable both)
- Type of Employment: Contractual, Permanent, Fixed Term Contract
- Probation period and review process;
- Employee benefits
- non-compete, confidentiality and non-solicitation provisions, Conflict of Interest
- External Engagement.
- Fixed term contracts are permissible in India only for jobs which is not regular in nature and are for specific period of time.
- It is not permissible for a regular job requirement.
- There is no time limit defined for fixed term but it should be for a reasonable period of time.
- In blue-collar category law prohibits you to replace one fixed-term contract employee with another fixed-term contract employee to avoid permanent employment.
- There is no limit defined for probation period as per law.
- Probation period varies from company to company and is primarily governed by terms of an employment.
- Probation periods in some organization also varies based on seniority level of the position in the organization.
- Probation period is generally from three to six months and, in some cases it is also one year.
- In many organizations there is no probation period for senior roles.
- There are maximum working hours define under State specific Shops & Establishment Act which is applicable to establishment other than factories and The Factories ACT, 1948 which is applicable to factories.
- Normal daily working hours are nine (9) hours per day and maximum up to 48 hours per week under these 2 acts.
- There is provision of break or rest of 30 minutes for every five hours of continuous work.
- General practise is total 9 hours of work including 1 hour of break in a day for organization working 6 days a week.
- All employees are eligible for overtime except employees who falling under the category of managerial role such as director, manager of factory, Project Manager.
- The overtime rate is generally the double of employee’s normal wage, for example in normal time per hour rate is 100 Rs. then the overtime rate would be 200 Rs. per hour.
- As per Factories Act and Shops & Establishment Act there is a limit set for maximum overtime for a week, month and quarter.
- For annual vacation Factories Act 1948 are applicable for employees working in a factory.
- Other than factory the state-specific Shops and Establishments Act provides guideline for annual vacation for employees in an establishment.
- As per the factories act, 19 days of annual vacation is permissible to employees in factories or manufacturing units subject to an employee having worked for 240 days in a calendar year.
- As per shops & Establishment typically, 12 to 21 days of annual vacation is permissible for employees in an establishment other than a factory.
- As per the general practise, organizations generally provide 12 to 21 days of annual vacation to employees and it varies from organization to organization.
- State specific Shops & Establishment ACT legislates holiday entitlement for employees. Also National and Festival Holidays Act is applicable in certain Act for Holiday entitlement for Employees.
- There are three national holidays on 26 January, 15 August and 2 October; and festivals and other holidays as per the state-specific Shops and Establishments Act, which can normally be five days or more.
- Many organizations generally give 10 to 12 holidays (including national, festival and other holidays).