Quick answer: An employment contract is the written agreement that fixes what you and your India hire owe each other: role, pay, hours, leave, notice and exit terms. It is enforceable under the Indian Contract Act, 1872. Since 21 November 2025, the OSH Code also requires an appointment letter for every employee.
- Section 2(h) of the Indian Contract Act, 1872 defines a contract as an agreement enforceable by law.
- Section 6(1)(f) of the OSH Code, 2020 requires a letter of appointment for every employee from 21 November 2025.
- Post-employment non-compete clauses are void under section 27 of the Contract Act.
- Fixed-term employment needs a written contract under the Industrial Relations Code, 2020.
What clauses belong in an employment contract in India?
Eight clauses carry most of the weight. Each has an Indian twist. A US or UK template tends to miss it.
| Clause | What Indian law or practice expects |
|---|---|
| Pay and CTC | A wage split that passes the 50% wage rule, since PF, gratuity and overtime follow it |
| Probation | A length you set, as no statute fixes one for office staff |
| Hours and leave | OSH Code limits plus your state Shops and Establishments Act |
| Notice | Your own term for managers, and one month for any worker you retrench |
| Confidentiality | Named categories of information, not a blanket line |
| Intellectual property | A signed IP assignment clause covering works and inventions |
| Restraints | In-term exclusivity only |
| Governing law | Indian law and a named Indian forum |
You can fold all of this into the statutory appointment letter. Many employers keep a longer employment agreement that the letter refers to. Both work.
Which mistakes do foreign employers make with an employment contract in India?
They reuse a home-country template. The restraint and exit clauses break first.
A 12-month post-exit non-compete clause is routine in many US offers. In India it is void, and the Delhi High Court held in Navigators Logistics v Kashif Qureshi that a void clause supports neither an injunction nor damages.
At-will wording fails too.
A software engineer with no supervisory or managerial duties can be a “worker” under the IR Code at any salary. End that person’s job for a reason other than discipline and it becomes retrenchment, with notice and compensation owed.
Let’s say a Boston SaaS firm hires a Pune developer on its standard US paperwork. It ends up with a void restraint, no Indian notice term and a pay table that ignores the basic wage split. All three are drafting errors. Cheap to avoid.
Who signs the employment contract under an EOR?
The EOR does. Its Indian entity is the legal employer, so it issues the contract, runs payroll and carries every statutory duty that comes with employing the person.
You sign a separate services agreement with the EOR, which passes the employee’s work product and IP to you. Our guide to the employer of record contract explains how the two layers fit.
How does Remunance draft employment contracts for your India team?
Remunance signs as the employer through its own Indian entity, Remunance Services Pvt Ltd in Kothrud, Pune. Through our employer of record services, each contract follows the OSH format, uses a Code-compliant wage split and routes IP to you. We have hired 1,200+ employees for clients across 34 Indian cities. If you already have a template, get it checked against Indian law.
What else do people ask about employment contracts in India?
Is a written employment contract mandatory in India?
A written appointment letter is mandatory for every employee under the OSH Code. No statute demands a separate long-form agreement, though fixed-term staff must have their contract in writing.
Can a non-compete in an Indian employment contract be enforced?
Only while employment lasts. Courts treat in-term negative covenants as valid, but any restraint that bites after exit is void under section 27.
How is an employment contract different from an offer letter?
An offer letter is a conditional proposal made before joining. The employment contract, or the appointment letter carrying its terms, governs the relationship once the person starts work.