Employment & Appointment Agreements
An appointment letter confirms that a person has been employed and on what basic terms. An employment agreement goes further and sets out pay and benefits, duties, probation, notice, confidentiality, ownership of work and the restrictions that apply during and after employment. Many employers use one document that does both.
The terms cannot go below what the law guarantees. India’s four Labour Codes, the Shops and Establishments law of the state and, for restrictions on an employee, section 27 of the Indian Contract Act, 1872 set limits that a contract cannot override.
When you need it
When hiring the first employees
A template written properly once is used for every hire that follows.
When existing letters are a page long
Short offer letters usually say nothing about confidentiality, intellectual property or what happens on exit.
When hiring senior people
Senior hires negotiate notice, bonuses, equity and restrictions, and need a fuller agreement.
After a change in the law
Pay structures and letters written under the old labour laws should be checked against the Labour Codes.
Before investment or a sale
Investors check that key employees have signed agreements that assign their work to the company.
How the process works
Five stages. Timings are typical, not promised.
- 1
Understand the workforce
A call or meetingEstablish the roles being hired, where they work, the pay structure, existing policies and which laws apply by the size of the establishment and the state.
Documents
- Current offer and appointment letters
- The pay structure
- Existing HR policies
- 2
Check the legal floor
A few working daysCheck wages, working hours, leave, notice and benefits against the Labour Codes and the state’s Shops and Establishments law, so that nothing in the contract falls below them.
- 3
Draft the templates
Commonly one to two weeksPrepare an offer letter, an appointment letter or employment agreement, and annexures for confidentiality and assignment of intellectual property, with variations for junior, senior and fixed-term roles.
- 4
Align the policies
Alongside the draftingMake sure the agreement refers correctly to the policies that apply, such as leave, conduct, the prevention of sexual harassment and data protection, and that the two do not contradict each other.
- 5
Roll out
From the next hireIssue the new documents to new hires, and decide how existing employees move to them. A change to an existing employee’s terms needs their agreement.
Common questions
The Occupational Safety, Health and Working Conditions Code, 2020 requires an employer to issue an appointment letter to every employee in the prescribed form. Several state Shops and Establishments laws carry a similar requirement.
The role and place of work, pay and its components, working hours, leave, probation, notice, confidentiality, ownership of work, restrictions during employment, grounds for termination and the policies that apply.
During employment, yes. After employment ends, a clause that stops a person working for a competitor is void under section 27 of the Indian Contract Act. Confidentiality and reasonable non-solicitation terms can still be enforced.
There is no single national limit for most private employment. Three to six months is common, with a right to extend once. The agreement should say what notice applies during probation and how confirmation happens.
The contract sets it, subject to the minimum under the law that applies to the employee. Termination of a worker covered by the Industrial Relations Code is subject to its notice and compensation rules, which a contract cannot reduce.
To a limited extent. An employer who has paid for real training can recover a reasonable sum if the employee leaves early, but not a penalty. A court looks at the actual cost and the time already served.
Under section 17 of the Copyright Act, the employer owns work made in the course of employment, unless agreed otherwise. Inventions are not covered by the same rule, so the agreement should assign all intellectual property expressly.
Not on its own. A change to pay, role or place of work beyond what the contract allows needs the employee’s consent, and for workers a change in conditions of service may need prior notice under the Industrial Relations Code.
Related
To discuss an employment agreement, write to info@ireniclegal.com or call +91 96547 47331. Written by Adv. Kanika Marwaha Bindal; last updated 7 October 2026.