What an employment agreement should cover
An offer letter usually records the headline terms; an employment agreement sets out the full relationship. At a minimum it should identify the parties, the role and start date, pay and how it is structured, probation, working hours and leave by reference to policy, confidentiality, ownership of work product, termination and notice, and governing law. Keep salary breakdowns in an annexure so the main document stays readable.
Contract terms cannot reduce benefits that labour law guarantees. Wages, statutory leave, provident fund, insurance and gratuity depend on the establishment and the employee’s category, and the applicable labour codes and State Shops and Establishments law prevail over less favourable contract terms.
Why there is no post-employment non-compete
Section 27 of the Indian Contract Act, 1872 makes agreements in restraint of a lawful trade or profession void, subject to a narrow sale-of-goodwill exception. The Supreme Court in Niranjan Shankar Golikari v. Century Spinning (1967) upheld restraints that operate during employment, while Percept D’Mark v. Zaheer Khan (2006) confirmed that restraints operating after the contract ends are generally void.
This draft therefore restricts competing work only during employment. After exit, it relies on confidentiality and an optional non-solicitation clause tied to the use of confidential information. Courts examine broad non-solicitation clauses closely, so keep them reasonable in scope and duration.
Termination and fair procedure
State the notice period clearly and whether pay in lieu is allowed. Dismissal for misconduct should follow a fair inquiry, and some categories of workers have additional statutory protection on retrenchment. On exit, settle wages and dues on time, and issue relieving and experience letters. LawLine’s relieving and experience letter formats can help.
Frequently asked questions
Is a non-compete enforceable in India?
A restraint that operates after employment ends is generally void under Section 27 of the Indian Contract Act. Restrictions during employment and confidentiality obligations are usually enforceable.
Does an employment agreement need stamp paper?
It depends on the State Stamp Act. Many States treat it as an agreement attracting a small duty; check before signing.
Can the agreement set a lower leave entitlement than the law?
No. Statutory entitlements prevail over less favourable contract terms.
Who owns work created by the employee?
Under the Copyright Act, works made in the course of employment generally belong to the employer, and the agreement should record the same for other IP.
Are my edits saved?
No. Edits reset when you leave the builder. Download your copy first.
Related formats
Official sources
This page gives general information, not legal advice. Forms, fees and timelines are set by each State and can change — confirm on your State portal before applying.