An employment agreement is the signed contract that sets out the terms between a company and an employee, covering role, pay, hours, notice, and exit. In India it works alongside the appointment letter and the state Shop & Establishment Act, so the two documents must not contradict each other.

Employment Agreement / Contract Template (India)

An employment agreement is the signed contract that sets out the terms between a company and an employee, covering role, pay, hours, notice, and exit. In India it works alongside the appointment letter and the state Shop & Establishment Act, so the two documents must not contradict each other.

What a Employment Agreement must include

  • Parties, effective date, and place of work
  • Job title, reporting manager, and duties
  • Compensation, CTC structure, and pay date
  • Probation period and confirmation terms
  • Working hours, week-offs, and holidays
  • Leave entitlement and statutory benefits (PF, ESI, gratuity)
  • Confidentiality, IP assignment, and conflict of interest
  • Notice period and termination grounds
  • Governing law and jurisdiction
  • Signatures of both parties with date

Drafting tips

  • Have a labour-law lawyer review notice, non-solicitation, and termination clauses, since enforceability varies by state and Section 27 of the Contract Act limits restraint of trade.
  • Keep the CTC numbers in this contract identical to the appointment letter and salary structure, so the documents never contradict each other.
  • Attach the referenced policies (POSH, IT, leave) as a linked set rather than copying them in, so you can update policy without re-signing the contract.
  • Get the Agreement signed on or before the date of joining, with both witnesses present, and give the employee a countersigned copy.

Employment Agreement format

EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is made on [DD MMM YYYY] at [City], between:

[Company Legal Name], a company incorporated under the Companies Act, 2013, with its registered office at [Registered Address] (the "Company"),

AND

[Employee Full Name], son/daughter of [Parent Name], residing at [Residential Address], holding PAN [ABCDE1234F] and Aadhaar [XXXX XXXX XXXX] (the "Employee").

The Company and the Employee are together referred to as the "Parties".

1. APPOINTMENT & ROLE
The Company appoints the Employee as [Designation] in the [Department] team, reporting to [Reporting Manager / Title]. The Employee accepts the appointment and agrees to perform the duties of the role and any reasonable additional duties assigned from time to time. This Agreement takes effect from the date of joining, i.e. [DD MMM YYYY].

2. PLACE OF WORK
The Employee's base location is [Office Address, City]. The Company may, with reasonable notice, require the Employee to work from another location or in a hybrid / remote arrangement as per the applicable policy.

3. COMPENSATION
The Employee's gross Cost to Company (CTC) is ₹[00,00,000] per annum, structured as below. Salary is credited by [pay date, e.g. the last working day] of each month, after statutory deductions.
  • Basic: ₹[amount] p.a.
  • House Rent Allowance (HRA): ₹[amount] p.a.
  • Special / Other Allowances: ₹[amount] p.a.
  • Employer PF contribution: ₹[amount] p.a.
  • Gratuity provision: ₹[amount] p.a.
  • Variable / Performance pay (if any): ₹[amount] p.a., paid per the incentive plan.
TDS is deducted under the Income-tax Act, 1961, based on the tax regime the Employee elects. (Verify slab rates and PF/ESI thresholds against the latest notification for FY 2025-26.)

4. STATUTORY BENEFITS
The Employee is covered under the Employees' Provident Fund (EPF), and under the Employees' State Insurance (ESI) scheme if within the wage threshold. Gratuity is payable under the Payment of Gratuity Act, 1972, on completion of 5 years of continuous service (subject to statutory exceptions). Contributions and eligibility follow the rules in force. (Verify current wage ceilings against the latest notification.)

5. PROBATION & CONFIRMATION
The Employee will be on probation for [3 / 6] months from the date of joining. The Company may extend probation once, in writing, by up to [3] months. On satisfactory performance the Employee will be confirmed in writing. During probation, either Party may end this Agreement with [15] days' written notice or salary in lieu.

6. WORKING HOURS & HOLIDAYS
Standard working hours are [9:30 AM to 6:30 PM], [Monday to Friday], with [Saturday and Sunday] as week-offs. The Employee is entitled to the national and festival holidays in the Company's annual holiday list. Working hours will not exceed the limits set under the applicable state Shop & Establishment Act.

7. LEAVE
After confirmation, the Employee is entitled to leave per the Company leave policy:
  • Earned Leave (EL): [12] days per year, accrued monthly.
  • Casual Leave (CL): [6] days per year.
  • Sick Leave (SL): [6] days per year.
  • Statutory maternity / paternity leave as per law.
Leave is applied through the HR system and is subject to manager approval. The state Shop & Establishment Act minimums override any lower figure in this clause.

8. CONFIDENTIALITY & INTELLECTUAL PROPERTY
The Employee shall keep confidential all business, technical, financial, and customer information of the Company, both during employment and after exit. All work product, inventions, and IP created in the course of employment belong solely to the Company. The Employee shall sign any document reasonably required to perfect the Company's ownership.

9. CONFLICT OF INTEREST & NON-SOLICITATION
During employment, the Employee shall not take up other paid work or any business that competes with the Company without written consent. For [12] months after exit, the Employee shall not solicit the Company's employees or customers with whom the Employee dealt in the last [12] months. Restrictions apply only to the extent enforceable under Section 27 of the Indian Contract Act, 1872.

10. CODE OF CONDUCT
The Employee agrees to follow the Company's HR policies, POSH policy, IT and information-security policy, and code of conduct, each as amended from time to time. These policies are read as part of this Agreement.

11. NOTICE PERIOD
After confirmation, either Party may end this Agreement by giving [60 / 90] days' written notice, or salary in lieu of the shortfall. The Company may waive part of the notice at its discretion. The Employee shall complete a handover of duties and Company assets before the last working day.

12. TERMINATION FOR CAUSE
The Company may terminate this Agreement without notice or pay in lieu for misconduct, fraud, breach of confidentiality, unauthorised absence beyond [X] days, or material breach of policy, after giving the Employee a chance to be heard.

13. FULL & FINAL SETTLEMENT
On exit, the Company will settle dues, including salary to the last working day, leave encashment, and gratuity (if eligible), net of recoveries and pending advances, within [45] days. A relieving letter and experience certificate will be issued after clearance.

14. GOVERNING LAW & JURISDICTION
This Agreement is governed by the laws of India. The courts at [City] have exclusive jurisdiction over any dispute. The Parties will first attempt to resolve disputes amicably before pursuing legal remedies.

15. ENTIRE AGREEMENT
This Agreement, together with the appointment letter and referenced policies, is the entire understanding between the Parties and supersedes prior discussions. Any change must be in writing and signed by both Parties.

IN WITNESS WHEREOF the Parties have signed this Agreement on the date first written above.

For [Company Legal Name]                    Employee

Signature: ____________________              Signature: ____________________
Name: [Authorised Signatory]                 Name: [Employee Full Name]
Designation: [HR / Director]                 Employee ID: [ID]
Date: __________                             Date: __________

Witness 1: ____________________              Witness 2: ____________________

FAQs

Is an employment agreement mandatory in India?

There is no single central law that forces a signed contract, but most state Shop & Establishment Acts require written terms of employment, and a signed agreement is the cleanest proof of role, pay, and notice in any dispute.

What is the difference between an appointment letter and an employment agreement?

An appointment letter confirms the offer and basic terms; an employment agreement is the fuller contract with confidentiality, IP, notice, and termination clauses. Many companies issue both, and the two must state the same compensation and notice terms.

Are non-compete clauses enforceable in India?

Post-employment non-compete clauses are generally void under Section 27 of the Indian Contract Act, 1872. Confidentiality and reasonable non-solicitation clauses hold up better, so draft restraints narrowly.

Can the notice period differ during and after probation?

Yes. It is common to keep a short notice period (such as 15 days) during probation and a longer one (60 to 90 days) after confirmation. State both clearly so there is no ambiguity at exit.