Your Employment Contract Has Clauses That Are Unenforceable - and Some That Are Just Missing

Most Indian tech companies copy-paste their employment contracts from a template they found online or borrowed from a law firm that works primarily with service companies. The result: contracts full of clauses that are either unenforceable, irrelevant, or actively harmful to the employer-employee relationship. I'm not a lawyer. But I've read hundreds of employment contracts while helping candidates evaluate offers, and I've seen enough patterns to know what works, what doesn't, and what's missing.

What most contracts get wrong

Overly broad non-compete clauses

"The employee shall not join any competitor of the Company for a period of 12 months following termination of employment." In India, post-employment non-compete clauses are generally not enforceable. Section 27 of the Indian Contract Act treats agreements in restraint of trade as void. Courts have consistently held that you cannot prevent someone from earning a livelihood after they leave your company.

So why do companies still include them? Mostly to intimidate. Some employees don't know the law and stay away from competitors out of fear. This is a bad-faith approach that erodes trust. What to include instead: a non-solicitation clause that prevents the departing employee from poaching your clients or employees for 6–12 months. This protects your legitimate interests without restricting someone's career.

Vague IP assignment clauses

"All intellectual property created by the Employee during the period of employment shall be the sole property of the Company." The problem: "during the period of employment" could include evenings, weekends, and vacations. An engineer who builds a side project on their personal laptop at midnight on a Sunday could technically be assigning that IP to the company.

What to include instead: "All IP created by the Employee in the course of performing their duties for the Company, or using Company resources, shall be the property of the Company. IP created by the Employee on their own time, without using Company resources, and unrelated to the Company's business, remains the property of the Employee."

Missing or ambiguous moonlighting policies

Many companies went too far after the 2022 moonlighting controversy: "The Employee shall not engage in any employment, consulting, or freelance work outside of their role." This blanket prohibition is legally questionable and practically unenforceable. What it does effectively is create a culture of secrecy where employees moonlight anyway, but hide it.

What to include instead: a disclosure-based policy. "The Employee may engage in outside work provided it does not compete with the Company's business, does not use Company resources, does not interfere with the Employee's performance, and is disclosed to the Company in writing."

What most contracts are missing

A clear notice period buyout clause

Contracts specify the notice period, but often don't specify what happens if either side wants a shorter exit. Can the employee pay instead of serving the full notice? Can the company release them early? Include specific terms: "Either party may terminate the notice period early by paying the other party an amount equal to the base salary for the remaining notice period days."

Data return and deletion terms

When an engineer leaves, what happens to the company data on their personal devices? Include a clear offboarding clause: "Upon termination, the Employee shall return all Company property and delete all Company data from personal devices within 7 days. The Company shall revoke all system access within 24 hours of the Employee's last day."

Stock option details (for startups offering ESOPs)

The contract often says, "The Employee shall be granted stock options as per the Company's ESOP plan." This tells the candidate almost nothing. Include the specifics: number of options, strike price, vesting schedule, cliff period, exercise window after leaving, and what happens in case of termination with vs without cause. If you're offering equity as part of compensation, document it as rigorously as salary.

The clauses that actually matter

Confidentiality

A well-drafted NDA clause that survives termination. Be specific about what's confidential - "everything" is too broad. "Customer lists, pricing strategies, source code, and product roadmaps" is specific and defensible.

Termination terms

For cause vs without cause. What constitutes cause (specific offences, not "any reason the Company deems fit"). What is the severance or notice pay for termination without cause? What happens to unvested stock options?

Probation terms

If you have a probation period (typically 3–6 months), specify: what the notice period is during probation (usually shorter - 15–30 days), what the evaluation criteria are, and what happens at the end of probation.

What I tell candidates

Read the whole contract before signing. Not skim - read. Pay specific attention to: notice period, non-compete, IP assignment, moonlighting, and ESOP terms. If something looks off, ask about it. Most companies will modify or remove unreasonable clauses when asked. They included them because the template had them, not because they're committed to enforcing them.

What I tell founders

Your employment contract is not a weapon. It's a relationship document. If you write it like a trap - maximising your rights while minimising the employee's - you'll get employees who sign reluctantly and leave angrily. Write a contract you'd be comfortable signing if the roles were reversed. Protect your legitimate interests. Respect your employees' legitimate interests. The best employment relationships don't need aggressive contracts. They need fair ones.