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Employment Agreement

The full bilateral employment contract between an Employer and Employee: compensation and its structure, duties, working hours, leave, statutory benefits, confidentiality, IP, restraints where lawful, and termination. The right instrument when terms are negotiated and the relationship needs a complete contract — from a household hiring domestic staff to a senior executive hire. For the short statutory letter the Code on Wages requires for every worker, use the Appointment Letter; for a pre-joining offer, the Offer Letter. Governed by the Indian Contract Act, 1872, applicable Shops & Establishments Acts, and the Labour Codes.

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What this document contains

17 clauses every employment agreement carries, plus 5 you can add.

  1. 01

    Introduction & Preamble

    Identifies the Employer and Employee, effective date, place of execution, and type of employment (full-time, part-time, fixed-term, contract).

  2. 02

    Appointment and Acceptance

    States operatively that the Employer appoints the Employee and the Employee accepts, on the basis set by employmentType. Optionally makes the appointment subject to background verification.

  3. 03

    Definitions

    Defines key terms: Compensation, Confidential Information, Company Property, Intellectual Property, Work Product.

  4. 04

    Employee Representations and Warranties

    What the Employee warrants on joining: freedom to contract, no former employer's confidential information, accuracy of the information furnished, right to work, consent to verification, and that misrepresentation is a ground for termination for cause.

  5. 05

    Employment Term & Probation

    Start date, end date (for fixed-term), probation period, confirmation conditions, and extension provisions.

  6. 06

    Designation & Duties

    Job title, department, reporting line, place of work, key responsibilities, transferability, and travel requirements.

  7. 07

    Compensation & Salary

    Basic salary, allowances (HRA, DA, special), gross salary, CTC breakup, payment frequency, and bank details.

  8. 08

    Working Hours

    Hours per week/day, working days, overtime provisions, flexible hours, and shift work under Factories Act / Shops & Establishments Act.

  9. 09

    Leave Entitlement

    Casual leave, sick leave, earned leave, maternity/paternity leave, public holidays, leave encashment, and carry-forward.

  10. 10

    Benefits & Statutory Contributions

    PF, gratuity, ESI, medical insurance, life insurance, ESOP, statutory bonus, and other benefits under applicable labour legislation.

  11. 11

    Code of Conduct

    POSH Act compliance, conflict of interest, outside employment, social media policy, and dress code.

  12. 12

    Confidentiality

    Definition of confidential information, obligations, post-employment survival, exceptions, and return of materials.

  13. 13

    Intellectual Property

    IP assignment of work product, prior inventions exclusion, moral rights waiver, invention disclosure, and patent cooperation.

  14. 14

    Data Protection and Privacy

    Compliance with DPDP Act 2023, IT Act 2000, data breach notification obligations.

  15. 15

    Termination

    Notice periods (employer/employee), termination for cause, cause grounds, severance, garden leave, notice buyout, full & final settlement, exit formalities.

  16. 16

    Governing Law and Dispute Resolution

    Applicable law, jurisdiction, and dispute resolution mechanism (courts or arbitration under Indian law).

  17. 17

    General Provisions

    Boilerplate: entire agreement, severability, waiver, amendment, notices, assignment, survival, compliance with laws.

Optional clauses

  • Non-Compete

    Restrictions on competing activities during and post-employment. Includes Section 27 Indian Contract Act enforceability disclaimer.

    Worth adding when: Restrict competing activities (during-term only recommended for Indian law §27)

  • Non-Solicitation

    Restrictions on soliciting employees and clients during and after employment.

    Worth adding when: Prevent poaching of colleagues or clients after exit

  • Force Majeure

    Relief from obligations due to events beyond reasonable control — acts of God, pandemics, government action.

    Worth adding when: Long-term employment or pandemic/disaster protection

  • Indemnification

    Obligations to indemnify against losses from breach, negligence, or third-party claims.

    Worth adding when: Senior roles handling company assets, client data, or financial decisions

  • Custom Clause

    A free-form clause for bespoke provisions not covered by standard clauses. Use clauseId 'custom-clause-1', 'custom-clause-2', etc. to add multiple.

What the law requires

Non-compete void post-employment
Post-employment non-compete restrictions are void under Section 27 of the Indian Contract Act. Only trade-secret protection and during-term restrictions survive. Draft non-compete clauses limited to the employment term.
Section 27, Indian Contract Act 1872; Superintendence Company v Krishan Murgai AIR 1981 SC 1162
Reasonable restraint during employment
Reasonable non-compete restrictions during the subsistence of employment are valid if narrowly scoped. The restriction must be reasonable in geography, duration, and activity.
Niranjan Shankar Golikari v Century Spinning 1967 SC
Employer owns copyright by default
For works created during employment in the course of employment, the employer is the first owner of copyright. Moral rights (Section 57) remain with the author and cannot be assigned.
Section 17(c), Indian Copyright Act 1957
Gratuity is statutory
Gratuity is payable after 5 years of continuous service — this is a statutory right that cannot be contracted away or reduced. Include gratuity in the benefits clause.
Section 4, Payment of Gratuity Act 1972
POSH compliance mandatory
Every employer must constitute an Internal Complaints Committee and maintain a sexual harassment prevention policy. Reference POSH obligations in the code of conduct clause.
POSH Act 2013
Minimum wage floor
Salary must not fall below the minimum wage for the applicable scheduled employment. Verify the current minimum wage rate before drafting compensation clauses.
Section 6, Code on Wages 2019
26-week maternity leave
Female employees are entitled to 26 weeks of paid maternity leave (for first two children). Employers with 50+ employees must provide crèche facility. Include maternity benefits in the leave clause.
Section 5, Maternity Benefit Act 1961
Standing orders override inconsistent service terms
For establishments covered by certified or model standing orders, employment conditions such as classification, probation, misconduct, and termination must be read consistently with those standing orders.
Industrial Employment (Standing Orders) Act 1946 / Industrial Relations Code 2020