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      12Mar
      How To Draft An Employment Contract
      Sana Virani

      Employees cater to the smooth functioning of any organisation. Employees have some obligations that are needed to be fulfilled in return they also expect a few rights reserved in favor of their interest. To set both the employee and the employer on the same page, it is very important to agree on the obligations and rights together. An employment contract helps the organisation build a strong foundation for work obligations but also contributes to employee welfare at the start itself. 

      Significance of employment contract: 

      Apart from protecting the rights of employees and communicating employers' expectations in writing, there are many things that should be clear to the employees for the goodwill of the company. Employee contracts put forward the terms and conditions that specify the termination, job responsibilities, compensation, benefits, etc. This provides a sense of security from both ends. These employment contracts can also be utilized to protect trade secrets, Intellectual property, and business strategies that are discussed with employees in several instances. However, Employment contracts may differ from place to place, majorly due to the implications of the labor law of that particular country. 

      Role of labor laws in the employment contract:

      Labour law plays a huge role in shaping the obligations of employees expected by organisations. Some countries have minimum wage provisions for employees whereas some labor laws have provisions for maternal and paternity leave. 

      Austria which is a central European country has 43 paid days off work per year. In Italy, the maximum working week is set at 40 hours and overtime must not exceed 48. So before drafting an employment contract that is valid in the eyes of law, it is crucial to dive into the technicalities of relevant laws and understand the rights and obligations of the employees and organizations. Relevant laws in India that govern various aspects related to employment are Factories Act.1948, The Maternity Benefit Act, 1961, The Payment of Gratuity Act, 1972, etc.

      There are two stages that are essential to be kept in mind before drafting the employment contract: 

      1. Creation of contract-

      The creation of a contract is the first and foremost step which involves framing clauses as per the labor law and the needs of the organization. It should include all the points keeping in mind the employment period and other crucial aspects. 

      The building blocks for the creation of an employment contract are the following: 

      • Introductory and Description clause

      When a story starts, the characters and their state is mentioned in the first paragraph itself. In the same way, the description of the parties in detail makes it clear for both parties that the purpose of legally validating is a very crucial part of the contract. The title of the contract which will either be “contract of employment” or “employment contract” is to be mentioned at the top followed by the statement of parties. Apart from the name of parties/organization, Pan number/ CIN, and address are important after which background story or recitals are to be stated. Most employment contracts do not add a list of meanings and abbreviations in the employment contract but just to be sure and avoid any confusion, it is safe to give interpretations in the contract itself.  

      • Intensive operative clauses

      Intensive operative clauses can be termed as the main body of the contract. The purpose of the employment contract is to ensure that the obligations are communicated and legally acknowledged. When two people join hands, there is something that both parties owe each other. 

      Clauses that state the obligations of the employee towards the organization are: 

      • Appointment and duties: It is very clear that an employee is hired as per his or her expertise to get certain things done which will benefit the organisation. Under the appointment and duties clause, the complete job profile of the employee and 
      • Non-competition/Non-solicitation: A non-solicit clause in the employment contract restricts the employee to solicit with clients and other employees of the employer after the course of his employment. Whereas a non-compete clause bars the employee from working with companies that are in direct competition with their employer. Non-solicitation comes into picture after the course of employment whereas the non-compete clause is enforced during the period of employment and after the termination of employment.
      •  Confidentiality clause: Companies that have excelled on the basis of their trade secrets, work ethics, and business techniques should make a deliberate attempt of adding this clause. The clause of confidentiality is important to prevent the spillage of trade secrets and plans for the near future.
      • Probation period clause: Most organizations have a probation period for their employees to assess their performance before they are employed on a permanent basis. In the employment contract, the period of probation should be mentioned clearly and precisely to avoid any confusion between employees and employers. 
      • Code of conduct and principles: Every organization has its own set of rules and disciplines that are framed by the management. New employees might not be aware of it since the code of conduct needs to learn about it in advance, so it is better to make it clear beforehand in the employment contract itself. 
      • Intellectual property:  To reserve the creative innovations of the company, the intellectual property rights clause will cater the best. In the employment contract, the company shall mention that all the intellectual property conceived in the term of employment shall belong to the company. 
      • Employees duty to return the company's property: Upon entering the organization, the employee gets access to things like a laptop, email, and card– upon the termination of the contract it is the employee's duty to return everything. This clause ensures that the employee follows this rule.
      •  Benefits of employees clause

      Since a contract is to make both parties secure, employees in the term of their employment are entitled to consideration in return for their services also benefits.  

      • Remuneration: Under the remuneration clause, the organization must mention the CTC or the gross salary that is being offered to the employee with the method and date for the payment of remuneration. It should also disclose the taxes and insurance deductions that will be made to the salary. 
      • Leave policy: Each and every employee is entitled to a certain number of paid leaves as per the organization's rules. Leavy policy clause should expressly define all the festival and sick leaves. 
      • Term and Termination clause- The term clause simply defines the start date and the period for which the contract shall have legal effect whereas the termination clause states the provisions to end the contract by either the company or the employee. 
      • Miscellaneous 

      Each and every employment contract has certain standardized clauses which complete the objective of signing a contract. These clauses are often known as boilerplate clauses and irrespective of the type or jurisdiction of the contract, they are a part of it. 

      A few miscellaneous clauses that suit employment contract are: Amendment, Successors, Third-party, No-waiver, Severability, Enforcement, Governing Law, Arbitration, and Notice. 

      1. Perfection of a Contract

      This is the final stage where the contract is actually made effective through execution.The formalities that are necessary for the perfection of the contract are:

      • To signify the consent of both parties on each and every part of the contract, it is important for both parties to sign the contract. This also makes it clear that both have read and this contract shall be legally enforceable. 
      • An Employment Agreement need not be registered for it to contain evidentiary value but stamp duty has to be paid.  Stamp duty rates can be checked in the schedule of the applicable Stamp Act as it differs from state to state. 

      In times when the contribution of employees can make or break the vision of an organisation, it is very necessary to have an employment contract. It should be tailored as per the needs of the organization as well as keeping laws that affect employees in balance. This article covers all the aspects and steps required to draft an employment contract. The above information gives you a sufficient knowledge boost as a business owner but it is always preferable to hire a professional that can take care of the legalities of your business. 

      20Feb
      The Legality and Viability of Multiple FIRs Based on the Same Facts and Allegations: A Critical Examination
      Zenith Law Chambers

      Introduction

      The First Information Report (FIR), as per Section 154(1) of the Criminal Procedure Code (CrPC), is a vital document that initiates criminal proceedings and plays a significant role in the criminal justice system. An official complaint, usually made by the victim, an eyewitness, or someone with knowledge of the incident, is submitted to the police. The filing of the FIR not only initiates the legal process but also provides the necessary information regarding the alleged offense, establishing the basis for further investigations and legal proceedings.

      The matter of several First Information Reports (FIRs) stemming from identical facts and accusations raises significant concerns regarding the legal procedure and the possibility of misuse. Although the FIR is an essential mechanism for reporting crimes, the presence of many FIRs on the same incidents made by the same informant poses complications. This occurrence necessitates an investigation into the legal and procedural ramifications, assessing if such duplicity is legally defensible or if it undermines the integrity of the criminal justice system. This article aims to explore the legal framework, judicial precedents, and practical factors related to the registration of several First Information Reports (FIRs) that originate from the same informant and set of circumstances.

      Legal Precedents

      1.    T. T. Antony v. State of Kerala[1]

      In the significant legal decision of T.T. Antony v. State of Kerala, the Supreme Court unequivocally declared that it is strictly forbidden to file a second complaint for the same incident. The ruling highlighted the significance of conclusiveness in legal proceedings, noting that permitting several grievances for the same occurrence would result in possible exploitation of the judicial system. The purpose of this rule was to deter unwarranted persecution of the defendant and facilitate a more efficient and effective criminal justice system.

      The court ruled that it is not permissible to file a second First Information Report (FIR) or conduct a new investigation based on every subsequent piece of information related to the same criminal offense or incident that gives birth to one or more criminal offenses. The investigating agency must only act upon information regarding the occurrence of a serious crime, which is initially recorded by the Officer In-charge in the Police Station diary under Section 158 of the Code of Criminal Procedure, 1973 (referred to as the Cr.P.C.). Any subsequent information would fall under Section 162 Cr.P.C., as it is the duty of the Investigating Officer not only to investigate the reported crime in the FIR, but also any related offenses that may have been committed during the same incident. The Investigating Officer is required to submit one or more reports under Section 173 Cr.P.C.

      2.    Anju Chaudhary v. State of Uttar Pradesh[2]

      The Supreme Court, in its landmark opinion, declared that it is not permissible to register a second First Information Report (FIR) due to the protection against double jeopardy, which is a basic right guaranteed by the Constitution. The restriction guarantees that a person accused of a crime is not subjected to several prosecutions for the same offense, thus preserving the principles of fairness and justice. The court established the "Same Transaction Test" by consolidating many acts into a single FIR. This test requires that the activities be closely connected in aim, cause, and effect, or as principal and subsidiary, in order to justify a shared FIR.

      The Supreme Court's discerning approach, as exemplified in the case of Anju Chaudhary, acknowledges that the assessment of whether two or more acts are considered the same transaction cannot be governed by a universally applicable formula. However, it relies on a meticulous analysis of the specific facts in each individual case. Factors such as temporal proximity, spatial proximity, action continuity, and purpose/design commonality are crucial in this evaluation. The Court explicated that if two episodes exhibit dissimilar temporalities, involve unique individuals, and arise from separate circumstances with divergent intentions, they cannot be deemed as constituting a single transaction. This comprehensive explanation guarantees the sensible application of the legal concept that prohibits future FIRs or the consolidation of trials, in order to protect justice and prevent any potential misuse of legal procedures.

      3.    Tarak Dash Mukharjee v. State of Uttar Pradesh[3]

      Allowing the registration of multiple First Information Reports (FIRs) by the same person against a common accused for the same facts and allegations presents a serious risk of subjecting the accused to multiple criminal proceedings for a single alleged offense, which would be an abuse of the legal process. This method not only imposes an excessive burden on the accused, but also raises questions regarding the effectiveness and concentration of the criminal justice system. This duplication not only violates the concept of not being tried twice for the same offense but also faces constitutional examination under Articles 21 and 22 of the Constitution of India. Subjecting an individual to repetitive legal processes may be considered a breach of Article 21, which safeguards the right to life and personal liberty.

      Moreover, the ongoing registration of First Information Reports (FIRs) may jeopardize Article 22, which guarantees certain rights to those who have been arrested. This practice has the potential to undermine the fairness of the legal proceedings and may violate constitutional safeguards that are intended to preserve the rights of the accused. It is of utmost importance to prevent such misuse in order to maintain the integrity of the legal system and uphold the ideals established in the Constitution.

      4.    Upkar Singh v. Ved Prakash[4]

      A significant ruling was issued by a panel of three judges in the Supreme Court, clarifying that submitting a further complaint against the same defendant would be considered an unauthorized modification of the facts presented in the initial complaint, as specified in Section 162 of the Code. The court clearly acknowledged the prohibition stated in Section 162, but importantly, it ruled that this prohibition does not apply to a counter-complaint filed by the accused or on their behalf. 

      The court stressed that a counter-suit, which alleges a different account of the incident reported in the initial complaint, is not covered by the statutory restriction. This nuanced interpretation helps to maintain a fair and comprehensive resolution of the matter by giving the accused an opportunity to provide a different version of events, while yet adhering to the procedural restrictions outlined in Section 162.               

      Doctrine Of Sameness 

      The legitimacy of the second First Information Report (FIR) was thoroughly examined in the case of T.T. Antony v. State of Kerala (2001)[5]. The court created the criterion of identity, which stipulates that unless the first and second FIRs, registered in separate instances, exhibit significant dissimilarities in terms of facts and circumstances, the second FIR cannot be lodged. Consequently, for there to be two First Information Reports (FIRs), there must be a distinction in the facts and circumstances leading to each report, a variation in the committed offense, or a difference in the individual accused of committing the offense. Only in that case, the second First Information Report (FIR) is admissible. 

      The court noted that the provisions from Section 154 to Section 173 of the Criminal Procedure Code (CrPC) pertain to the entire process of investigation, from the initial report to the completion of the investigation, and specifically apply to the first information provided on the commission of a cognizable offense. This fulfills the criteria outlined in Section 154 of the Code of Criminal Procedure. 

      Therefore, there is no opportunity to initiate a new inquiry upon receiving any further information regarding the same cognizable offense. 

      Improper and Excessive Utilization of the Legal System:

      It is essential to thoroughly examine the possibility of misuse by utilizing several First Information Reports (FIRs) under the requirements of the Code of Criminal Procedure (CrPC) 1908 in order to guarantee a fair and equitable administration of justice. Section 154 of the CrPC confers the privilege to any anyone to notify the occurrence of a cognizable violation. However, determining whether repeated First Information Reports (FIRs) are lodged with malicious intent or as a form of harassment requires a meticulous study of the circumstances pertaining to each case. Courts must carefully evaluate whether these First Information Reports (FIRs) truly relate to separate criminal acts or if they are purposefully employed to manipulate legal proceedings.

      Occurrences of malevolent intentions and persistent mistreatment should be thoroughly examined to safeguard persons from unwarranted adversity. When several First Information Reports (FIRs) are lodged with the main intention of inflicting harm, seeking revenge, or resolving personal disputes, it undermines the essential tenets of justice. The judiciary must stay diligent in detecting such occurrences and implement suitable measures to discourage the misuse of legal procedures for malicious intentions.

      It is essential to establish measures to prevent the abuse of the legal system in order to uphold the integrity of the judicial process. It is important to contemplate legislative amendments and implement procedural safeguards in order to deter the submission of groundless or malevolent First Information Reports (FIRs). This may entail implementing sanctions for the submission of fraudulent complaints, establishing procedures for the prompt dismissal of baseless claims, and establishing measures to hold individuals accountable for the improper use of the system. Encouraging legal knowledge and awareness can also help promote a conscientious and ethical use of legal resources.

      The significance of the impact on investigative processes cannot be exaggerated. Having multiple First Information Reports (FIRs), particularly those motivated by malevolent intent, can place a burden on investigative resources and shift focus away from legitimate criminal operations. Judicial authorities should proactively oversee cases containing several First Information Reports (FIRs) in order to avoid placing excessive strain on investigative agencies. It is crucial to strike a balance between safeguarding the rights of the accused and maintaining an efficient investigative process. This ensures that justice is served while also deterring the exploitation of legal procedures for personal or vengeful reasons.

      Conclusion 

      Ultimately, we have thoroughly analyzed the complex legal framework governing the registration of several First Information Reports (FIRs), considering important legal precedents, constitutional protections, and practical factors. The essential function of the First Information Report (FIR) in commencing criminal proceedings has been recognized, however, concerns regarding the possible exploitation and manipulation of the legal procedure through the use of multiple FIRs have been emphasized. Notable legal decisions, such as T.T. Antony v. State of Kerala, Anju Chaudhary v. State of UP, Tarak Dash Mukharjee v. State of Uttar Pradesh, and Upkar Singh v. Ved Prakash, have established significant principles and criteria to assist in determining the legality of second FIRs. The "Same Transaction Test" and the notion of sameness have been clarified, highlighting the importance of thoroughly analyzing the specific details and context of each case in order to prevent misuse. 

      Furthermore, the potential consequences for the accused's rights, investigation procedures, and the general effectiveness of the criminal justice system have been discussed. Advocates have recommended the establishment of legislative reforms, procedural protections, and the promotion of legal literacy as measures to prevent misuse. The utmost importance lies in maintaining a harmonious equilibrium between safeguarding individual rights and guaranteeing the efficient and fair functioning of the legal system, while upholding the ideals outlined in the Constitution.

      [1] (2001) 6 SCC 181

      [2] Criminal Appeal No. 2039 of 2012 (Arising out of SLP (Crl) No. 9475 of 2008)

      [3] Criminal Appeal No. 1400 of 2022 (Arising out of SLP (Criminal) No. 503 of 2020) and cited in 2022 Live Law (SC) 731

      [4] (2004) 13 SCC 292

      [5] Supra note 1.

      20Feb
      New Payment Rule for MSMEs: Balancing Positive and Negative Impacts
      Harsh Vardhan

      Introduction:

      In a significant move, a new rule has been introduced, requiring buyers to settle payments for goods purchased from Micro, Small, and Medium Enterprises (MSMEs) within 45 days of delivery. This development aims to enhance the financial stability of MSMEs, but it comes with both positive and negative impacts that need careful consideration.

      Positive Impact:

      The foremost positive impact of this rule lies in streamlining cash flows for MSMEs. Timely payments can significantly improve their financial health, providing them with the necessary resources to invest in growth and sustainability. This move aligns with the broader goal of supporting and nurturing small businesses, essential for a thriving economy.

      Furthermore, prompt payments can create a more predictable and stable environment for MSMEs, allowing them to plan and execute their business strategies effectively. This predictability can foster an atmosphere of trust and reliability between buyers and MSMEs, contributing to long-term business relationships.

      Negative Impact:

      On the flip side, the 45-day payment window may pose challenges for buyers. Meeting stringent timelines could strain the operational flexibility of businesses, especially in sectors where extended payment terms have been the norm. Some buyers might face difficulties in aligning their financial processes with this new regulation, potentially impacting their overall efficiency.

      Additionally, the rigid time frame might lead to rushed decision-making on the part of buyers, potentially affecting the quality of the procurement process. Striking a balance between timely payments and ensuring a thorough and thoughtful approach to procurement becomes a crucial challenge under the new rule.

      Conclusion:

      The new rule mandating payments within 45 days for MSMEs reflects a positive step towards fortifying the financial foundations of small businesses. However, it is essential to navigate the potential challenges it presents for buyers. Striking a balance that ensures the timely support of MSMEs while acknowledging the operational realities of buyers will be key to the successful implementation of this regulation. As stakeholders adapt to this change, ongoing dialogue and adjustments may be necessary to refine and optimize the impact of this rule on both MSMEs and buyers alike.