My company is asking to sign a weird agreement
Querist :
Anonymous
(Querist) 04 August 2011
This query is : Resolved
Hi,
I left my old job and joined a new company few days back. At the time of interview they haven't said anything about it and after a week they said you have to sign an agreement which will be on stamp paper and you will have to sign in front of a lawyer.
I am pasting the agreement which they gave to us. Please help me in understanding what is all this. Please reply as soon as possible..
This AGREEMENT, entered into this ___ day of [Month], 20__, between [Business], a [state of
incorporation] (the "Company"), and [name of employee] (the "Employee"),
WITNESSETH THAT:
WHEREAS, the parties hereto desire to enter into this Agreement to define and set forth the terms
and conditions of the employment of the Employee by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth below, it
is hereby covenanted and agreed by the Company and the Employee as follows:
1. Position; Employment Period
The Company hereby employs the Employee as its [position], and the Employee hereby agrees
to serve in such capacity, for the period beginning [start date], 20__, and ending on the date on which the
Employee's employment is terminated in accordance with paragraph 8 below (the "Employment Period").
2. Performance of Duties
The Employee agrees that during the Employment Period he shall devote his full business time
to the business affairs of the Company and shall perform his duties faithfully and efficiently subject to
the direction of the [President] of the Company; provided that the foregoing shall not limit or prevent the
Employee from serving on the board of directors of charitable organizations or other business corporations
not in competition with the Company. The Employee shall not be assigned duties and responsibilities that
are not generally within the scope and character associated or required of other employees of similar rank
and position.
3. Compensation
(a) Subject to the following provisions of this Agreement, during the Employment Period the
Employee shall be compensated for his services as follows:
(b) He shall receive an annual salary, payable in monthly or more frequent installments, in an
amount which shall initially be [ amount] per annum, subject to such increases as may from time to time
be determined by the [President] of the Company.
[specify pension and other non-salary benefits.]
(c) He shall be entitled to vacations of not less than [amount] per year.
(d) He shall be entitled to such other perquisites as may be customarily granted by the Company to
employees of similar rank and position.
4. Disability
Subject to the provisions of paragraph 8, if the Employee's employment is terminated during the
Employment Period by reason of his Disability this Agreement will null & void.
5. Competing Businesses
During the period of his employment under this Agreement, the Employee shall not be employed
by or otherwise engage in or be interested in any business in competition with the Company, or with any
of its subsidiaries or affiliates, except that the Employee's investment in any such business shall not be
considered a violation of this paragraph if either (a) the Employee owns less than [number]% of the equity
thereof, or (b) such business is not in competition with the Company.
6. Confidentiality
During and after the Employment Period, the Employee will not divulge or appropriate to his own
use or to the use of others, in competition with the Company, any secret or confidential information or
knowledge pertaining to the business of the Company, or of any of its subsidiaries, obtained by him in any
way while he was employed by the Company or by any of its subsidiaries.
If employee left the job due to any reason he will not abele to work with any Forex & our
competitor company or their associated direct or indirect for next 3 years from the day of left the job. If
he works with our compotators & their associates direct or indirect so employee will pay Rs.10000000.00
competition to Company Name & Jail for 15 years.
7. Remedies
If at any time the Employee violates to a material extent any of the covenants or agreements
set forth in paragraphs 5 and 6, the Company shall have the right to terminate all of its obligations to
make further payments under this Agreement. The Employee acknowledges that the Company would be
irreparably injured by a violation of paragraph 5 or 6 and agrees that the Company shall be entitled to an
injunction restraining the Employee from any actual or threatened breach of paragraph 5 or 6 or to any
other appropriate equitable remedy without any bond or other security being required.
8. Amendment and Termination
This Agreement may be amended or cancelled by mutual
agreement of the parties without the consent of any other person and, so long as the Employee lives, no
person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject
matter hereof The Employment Period shall terminate as of the earliest of:
(a) [date];
(b) the last day of the month in which the date of the Employee's death occurs; or
the date on which the Company gives notice to the Employee if such termination is for Cause or Disability.
(c) For purposes of this Agreement, "Cause" means the Employee's gross misconduct resulting in
material damage to the Company or willful and material breach of this Agreement.
9. Notices
Any notice required or permitted to be given under this Agreement shall be sufficient if in writing
and if sent by registered mail to the Company at its principal executive offices or to the Employee at the
last address filed by him in writing with the Company, as the case may be.
10. Non-Assignment
The interests of the Employee under this Agreement are not subject to the claims of his creditors
and may not be voluntarily or involuntarily assigned, alienated or encumbered.
11. Successors
This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors
and assigns and upon any person acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company's assets and business.
12. Applicable Law
The provisions of this Agreement shall be construed in accordance with the laws of the India &
International Business Laws.
13. Counterparts
The Agreement may be executed in two or more counterparts, any one of which shall be deemed
the original without reference to the others.
IN WITNESS WHEREOF, the Employee has hereunto set his hand, and the Company has caused
these presents to be executed in its name and on its behalf, all as of the day and year first above written.
[Employee Name]
[name of business] Inc.
By:
Its: Duly Authorized Representative
Please help me...
Thanks in advance....
ajay sethi
(Expert) 04 August 2011
clause 6 is not in your interest . earlier part of confidentiality clause is ok .
delete provision as to not being able to work with competitiors for 3 years
in addtion claim made for compensation of amount of 1 crore and jail for 15 years is harsh .
Querist :
Anonymous
(Querist) 04 August 2011
pls suggest what can we tell them to add instead of this clause?? Is there no government rule that they can ask for only some amount like most of the companies do for eg 100000 or something like that??
Querist :
Anonymous
(Querist) 04 August 2011
are rest of the points mentioned in the agreement ok apart from 6th point?????
prabhakar singh
(Expert) 04 August 2011
This is an agreement dictating terms of your employment.
para 5 &6 are noticeable.The co. treats its' business secrets are key to its' success which shall naturally be got known to its working employees,who may in tern leak it for their own gain to others in similar business.
Therefore co.is asking you to have a disciplined approach in this matter not ONLY during the course of employment with in co.BUT also AFTER LIVING THE EMPLOYMENT OF CO.YOU ARE BEING ASKED NOT TO ACCEPT ANY EMPLOYMENT WITH ANY CONCERN WHO HAS A SIMILAR NATURE OF BUSINESS AS IS ONE OF THIS CO.WITH IN 3 YEARS from the DATE OF LEAVING THIS JOB.
IN CASE YOU FAIL TO COMPLY WITH THIS TERM THE CO. IS ASKING YOU TO AGREE TO PAY IT Rs. 10000000.00(ONE CRORE)AS COMPENSATION AND TO FACE CIVIL AND CRIMINAL LIABILITY.
HOW EVER NO CRIMINAL LIABILITY ARISES FOR NON PERFORMANCE OR BREACH OF THIS AGREEMENT
BUT CIVIL LIABILITY MAY ARISE AND PREFIXED QUANTUM MAY NOT BE AWARDED UNLESS PROVED TO HAVE REALLY CAUSED,BUT IT CAN NEVER BE MORE THAN PREFIXED.
Querist :
Anonymous
(Querist) 04 August 2011
what are the disadvantages if i sign this agreement?????
R.Ramachandran
(Expert) 04 August 2011
Dear Anonymous,
I am not sure whether paragraph 6 of the Agreement which you have posted above is "cut and paste" from the Soft copy of the Agreement given by the Company or you have TYPED IT by seeing the Agreement.
In either case, one can sign the agreement and no harm will be caused to you. This is for the reason that asking you not to join any competitor business is complete restraint of labour and that is against law. So you in spite of signing such an agreement, the company cannot enforce the same against you. As regards compensation of Rs. 1 crore, again the Company will not be able to enforce against you. The question of jail for 15 years cannot be decided by the Company, it has to be decided by the Court. Since there is no criminality involved in the whole affair, the question of any jail term (leave alone 15 years jail) does not at all arise and no court in India will rule against you.
So without making any fuss, better sign the agreement. But ensure that you do not discuss or divulge with any one any of the official secrets. Even if you join any new firm (including competitors) do not discuss or disclose anything about the previous firm, their practices, processes etc.
Querist :
Anonymous
(Querist) 04 August 2011
Dear All,
Thank you so much.....
Regards
