How Do I Draft an Employment Contract for a Shared Salary Arrangement?

I need an appointment letter or employment contract format for recruiting a candidate based on the following conditions.

My company is a manufacturing company. We sell our products through dealers/distributors, or our marketing executives directly sell them to clients. Currently, we have one distributor in Ahmedabad, and we have planned to penetrate the Ahmedabad market through that distributor as he is well aware of local marketing conditions.

We have agreed to appoint a person for marketing who will work towards achieving the goals of both our company and the distributor. Therefore, we have decided to split his salary 50-50. This means that 50% of his salary would be paid by my company, and the remaining 50% would be covered by the distributor.

I am unsure about the employment contract or appointment letter required for such an employee. Hence, I kindly request you to provide me with the appropriate appointment letter format that satisfies the terms mentioned above.

Kind regards,
Harshavardhan

Sharing of Salary and Employer Responsibilities

Sharing of salary in the ratio of 50-50 for one employee is your agreement with your dealer. I wish to know who will be the employer of that person. Will it be both of you, only you, or your dealer? If both, then you will issue an appointment letter, and your dealer will also issue an appointment letter separately, mentioning their share of the salary. Got the point? In that event, both employers' terms and conditions of appointment will apply.

If only you will appoint him, then issue him an appointment letter as per your company policy and recover the salary of his share from the dealer. It is suggested you appoint the person, govern his services, and appoint your dealer as his reporting head.

Thanks,

V K Gupta

You must be aware as an HR person that dual employment is not allowed in India. Legality aside, what if you allow this employee to take dual employment and others also start taking advantage of the same!

Solution for Dual Employment Issue

Your way out is to issue that person an appointment letter from your company and have a separate agreement with your distributor for outsourcing your staff for a fixed fee (which will take care of your 50%).

Request for Appointment Letter Format

I need an appointment letter or employment contract format for recruiting a candidate under the following conditions. My company is a manufacturing company. We sell our products through dealers/distributors, or our marketing executives directly sell them to clients. We have one distributor in Ahmedabad, and we have planned to penetrate the Ahmedabad market through that distributor as he is well aware of local marketing conditions. We have agreed to appoint a person for marketing who will work to achieve the aims of both our company and the distributor. Therefore, we have decided to pay him a 50-50 salary, with 50% paid by my company and 50% paid by the distributor. I am not aware of an employment contract or appointment letter for this kind of employee. Hence, I request you to provide me with the proper appointment letter format that fulfills the above contract.

Kind regards,
Harshavardhan

Deciding Reporting and Cost Responsibilities

First of all, decide to whom the employee will report and who will bear the additional costs, such as the employee's liabilities during their tenure with the company.

Hiring on Payroll

It is recommended that the employee should be hired on your payroll so that they can establish a foothold in the market and become an asset to your company. While distributors may change, it is the employee who ultimately shapes the reputation of the company and its products.

Salary and Appointment Letter

Regarding the salary, you can issue a debit note for the employee's salary and deduct the same from the distributor's outstanding balance. As for the appointment letter, it should follow the standard format with all the terms and conditions of employment, which can be found under the "information" tab on CITEHR. If you encounter any difficulties in assessing the format, please reach out to us for guidance.