The companies act defines a “company” under section 2(20) of the companies act of 2013 as an association of persons registered under the Companies Act 1956 in a partial manner) act 1956 or Companies Act 2013. In layman language, a company is defined as an association of persons or a conglomeration of persons who work towards a common objective. A company is a legal artificial person which possess the capability of being sued and to sue for any omission or commission of an act. The Companies Act of 2013 defined the constituents of a company in the case of Solomon versus A Solomon & Co[1], the court defines a company and its validity if the company is duly incorporated, it is an independent identity with its duties, rights and liabilities appropriate to itself.
However, it becomes essential for a company to engage in a variety of contracts to maintain its legal solidarity. On the other hand it becomes mandatory for employees to engage in the contracts to display allegiance and conformity with their company. Various legal agreements are signed and sanctions to minimize the risk of any legal liability. For a contract to be valid, the requisites given under the Indian Contract Act 1872 under section 2(e) of an offer, acceptance, free consent, promise, consideration, enforceability shall be fulfilled.
- Memorandum of Understanding- MOU
A company requires to have its MOU with its partners and the partnership firm, mentioning the profits, losses, shares and dividends to determine limited legal partnership (LLP) or limited legal company (LLC). A memorandum of understanding is to ensure the involvement of every person in the assignment and making sure what the roles, duties and liabilities of each partner, employer and employee are stated clearly.
- Non-Disclosure Agreement (NDA) & Confidentiality Agreement
For any company, it becomes a sine qua non to ensure that the employees, clients, associates, consultants, vendors and other members of the company enter into NDA agreements at various stages to maintain confidentiality of the information shared. Main purpose of NDA is to maintain the privacy, confidential information and sensitive information of the company which is required to be shared with others at various times.
- Employees Contract and Offer Letter
An employers agreement or employers contract is an agreement between the employer and the employee to document terms and conditions agreed between the parties. A breach on the part of a party by any action, omission or commission might result in a breach of contract.
Other working conditions such as wage, time and stocks, remunerations, appraisals, salary, etcetera are mentioned in the employment agreement. A Non- compete clause and non-solicitation clause is also engaged between employer and employees to prohibit joint ventures with other companies and to prevent poaching clients of other companies.
- Service Agreement of Directors
The Directors’ service agreement resembles an employment agreement & it states the basic formalities and duties of the directors of the company when it comes to maintaining their company’s environment and health conditions. There are a few basic duties that the director of each company is obligated to perform towards its employers. This Agreement mentions the responsibility, duties, pay scale and liability- arrangements of the directors once the service is completed or rendered.
- Pensions & Insurances
The EPFO (Employees Provident Fund Organization) makes it necessary for any organization or company that employs 20 or more employees who are registered under the Employees Provident Fund Act and Miscellaneous Provisions Act of 1952.
The EPFO is prevailing with three schemes, namely- The Employees Provident Fund Scheme, 1952 (EPF), the Employees Pension Scheme, 1995 (EPS) and the Employee Deposit Linked Insurance Scheme, 1976 (EDIL). If a company has more than 20 people, then as an employer one has to substantially keep a track under which scheme a company or employer can fall.
Moreover, ESI scheme is a social security scheme designed to protect employees (against disability, sickness, maternity or death) working in the organized sector by providing medical care and/or compensation to the insured and/or family members of the insured.
- Termination Compensation
The Industrial Dispute Act, 1947 states the method and system (re-employment of end specialists, end arrangement, manager commitments, concept of conservation, etc.) to be taken after the end of representative administrations (conservation). Conservation implies disciplinary activity within the shape of end as discipline and such workers being ended are entitled to compensation as expressed within the Act.
- Workmen’s Compensation
Any damage, illness or accident arising out of the course of work must be compensated for beneath the Workmen’s Emolument Act, 1923. This Act for the most part applies to people being eviscerated or murdered in work within the railroad, fabricating, development, mines, ranches, etc. (or any perilous work).
- Equal Wages
Break even with Remuneration Equal compensation for all representatives independent of sexual orientation is represented by the Rise to Compensation Act, 1976. It is the obligation of the boss to forbid segregation in enrollment, arrangement, examinations, advancement, compensation, etc. This Act commands that each boss keeps up an enlist of representative subtle elements and documents.
Conclusion
These agreements are not exhaustive and there are several other agreements and contracts that a company might engage into as per the circumstances and requirements.
Author: Anushka Seemendra, ICFAI University, Dehradun.
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[1] [1896] UKHL 1
