# Employment Agreement, Offer & Appointment Letters

> An employment agreement sets out role, pay, probation, working hours, leave, notice, confidentiality, IP ownership and termination. Since the Labour Codes took effect on 21 November 2025, appointment letters are mandatory for employees and salary structures must respect the 'wages' definition, under which excluded allowances can't exceed 50% of remuneration. Post-employment non-competes are void under Section 27 of the Contract Act, but confidentiality and non-solicitation clauses can be enforced.

Practice: Legal Documents & Agreements — https://www.industax.com/services/legal-documents/

We draft offer letters, appointment letters and fuller employment agreements for senior hires, with CTC structures that work for PF, gratuity and tax under the new wage definition.

For startups we add IP assignment and confidentiality terms that investors look for in due diligence, and for remote and cross-border employees we address the governing law and statutory benefits that apply.

## Key facts

| Item | Detail |
| --- | --- |
| Appointment letter | Mandatory under the Labour Codes |
| Wage rule | Excluded allowances ≤ 50% of total remuneration |
| Non-compete after exit | Void (Section 27, Contract Act) |
| Enforceable | Confidentiality, non-solicitation, IP assignment |
| Fixed-term staff | Gratuity after 1 year |

## Who needs this

- Startups and SMEs hiring employees
- Companies updating contracts for the Labour Codes
- Employers hiring senior or remote staff

## What's included

- Offer and appointment letter templates
- Employment agreement
- CTC structure review
- Policy cross-references

## Documents

- Role and compensation details
- Existing templates and policies
- Location of employment

## Process

1. **Review** — Existing letters and pay structure checked.
2. **Draft** — Templates aligned to the Labour Codes.
3. **Roll out** — Issued to new and existing staff.

## FAQs

### Can I stop an employee from joining a competitor?

Not after they leave — post-employment non-competes are void in India. You can restrict competing activity during employment, prohibit use of confidential information, and restrict soliciting clients and employees for a reasonable period.

### Is an appointment letter compulsory?

Yes. The Occupational Safety, Health and Working Conditions Code requires employers to issue an appointment letter to every employee.

### Does the 50% wage rule change take-home pay?

It can. If basic pay is below 50% of total remuneration, the excess allowances are added to wages for PF and gratuity, increasing those contributions.

## Official sources

- India Code — central Acts: https://www.indiacode.nic.in/

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Canonical page: https://www.industax.com/services/legal-documents/employment-agreement
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.