Summary
This article provides a structured overview of the crucial elements to include and avoid in an employment agreement within the Indian context. It outlines best practices for defining intellectual property ownership, confidentiality, and post-employment obligations. The authors emphasize the importance of clarity in drafting, including employee indemnity and remedies for breach. Additionally, the piece advises against overly broad definitions and excessive non-compete durations. The guidelines serve as a foundational reference but recommend legal consultation for case-specific advice.
Original Date of Publication: November 26th, 2009
Do’s
1. Define the ownership of Intellectual Property created during the term of employment clearly.
2.Clearly state the extent to which IP will be transferred to the employer.
3. Ensure that Employee is obliged to execute all necessary documents and assists the Employer in transferring any Intellectual Property created by him during his employment to the Employer. Also incorporate provisions requiring employee’s co-operation with respect to prosecution and litigation.
4. Ensure that Employee is obliged to refrain from using third party Intellectual Property without the permission of the Employer. Incorporate necessary safeguards in case of such a use by the Employee.
5. Define Confidential Information that may be disclosed to the Employee during his employment with the Employer. Incorporate all provisions recommended in the NDA in the confidentiality clause.
6. Clearly state the meaning of course of employment.
7. Incorporate non-competition and non-solicitation clauses based on the position of the employee and his access to the Employer’s confidential information.
8. Include post employment obligations of the Employee clearly with regard to Confidential Information and Intellectual Property among others;
9. Ensure that Employee indemnifies the Employer for any losses or damages suffered by the Employer due to the Employee’s action or inaction.
10. Include adequate remedies in case of breach of terms of agreement by the Employee.
Don’ts
1. Avoid restricting the scope and extent of IP to be transferred to specific activities. 2. Do not provide for more than two years of non competition period in the agreement; 3. Avoid broad and general language for definitions.
Note: Please note that the Do’s and Don’ts provided hereunder are broad and non-exhaustive guidelines. Kindly consult a lawyer for specific advise.
Authors: Dr. Kalyan Kankanala and Ms. Vintee Mishra
Image Source/Attribution here (Governed by Creative Commons – CC0 1.0 Universal (CCo 1.0) Public Domain Dedication)
Point 9 states that an employment agreement should contain terms “to ensure that Employee indemnifies the Employer for any losses or damages suffered by the Employer due to the Employee’s action or inaction”
To me indemnifying employer in action or inaction is not logical, bcoz same may have been done in company’s interest only, mostly such actiones are not penned & taken immediately.
E.g my advice to any company of launching the product one day before or after can put company eitherside. Sameway, for a very important invention for company, becoz of oneday late filing i missed the priority or complete specification filing date persuant to provisional for which comp lost the rights.
What do u think, Will employee(like me)ever be able to indemnify employer who may talk in millions now (while a small mistake of employee can lead to that much of loss easily)