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Free Employment Agreement Template for India
Establish a legally sound employment relationship in India with a comprehensive employment contract that addresses mandatory statutory entitlements, confidentiality, IP rights, and termination under Indian labour law.
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Nexus Technologies Private Limited
Plot 21, HITEC City, Hyderabad, Telangana - 500 081 · CIN / PAN: U74999TG2018PTC345678
+91 40 6789 1234
hr@nexustechnologies.in
EMPLOYMENT AGREEMENT
EMPLOYER
Nexus Technologies Private Limited
Plot 21, HITEC City, Hyderabad, Telangana - 500 081, Telangana
CIN / PAN: U74999TG2018PTC345678
CIN / PAN: U74999TG2018PTC345678
By: HR Contact: Sneha Raju Iyer
EMPLOYEE
Arjun Kumar Reddy
Flat 5B, Aparna Estates, Gachibowli, Hyderabad - 500 032, Telangana
PAN: ABCAR5678G
Aadhaar: 9876 5432 1098
Tel: +91 98765 43210
Email: arjun.reddy@email.com
PAN: ABCAR5678G
Aadhaar: 9876 5432 1098
Tel: +91 98765 43210
Email: arjun.reddy@email.com
By: S/o, D/o: Kumar Venkata Reddy
RE: Employment Agreement — Software Engineer (Engineering)
Date of Joining: 1 May 2026
COMPENSATION SUMMARY
| EMPLOYEE | Arjun Kumar Reddy |
| PAN | ABCAR5678G |
| JOB TITLE | Software Engineer |
| DEPARTMENT | Engineering |
| EMPLOYMENT TYPE | permanent (indefinite-term) |
| PLACE OF WORK | Hyderabad, Telangana |
| MONTHLY CTC | 80,000.00 INR |
| BASIC SALARY | 32,000.00 INR |
| HRA | 16,000.00 INR |
| SPECIAL ALLOWANCE | 32,000.00 INR |
| EPF | 12% employee + 12% employer on basic salary (EPF Act 1952 s. 6) |
| ESI | Not applicable |
This Employment Agreement ("Agreement") is entered into between Nexus Technologies Private Limited ("Company" or "Employer"), a company incorporated under the Companies Act, 2013 with its registered office at Plot 21, HITEC City, Hyderabad, Telangana - 500 081, and Arjun Kumar Reddy ("Employee"), residing at Flat 5B, Aparna Estates, Gachibowli, Hyderabad - 500 032, PAN: ABCAR5678G, Aadhaar: 9876 5432 1098, Date of Birth: 15 March 1995. This Agreement is made under and governed by the Indian Contract Act, 1872 ("ICA 1872"), the Industrial Disputes Act, 1947 ("IDA 1947"), the Payment of Wages Act, 1936 ("PWA 1936"), the Income Tax Act, 1961 ("ITA 1961"), and other applicable Indian labour legislation. The Parties agree to the following terms and conditions of employment.
1.
POSITION AND DUTIES
The Employee is appointed as Software Engineer in the Engineering department on a permanent (indefinite-term) basis, with effect from 1 May 2026. The Employee's principal place of work shall be Hyderabad, Telangana. The Company reserves the right to require the Employee to work at any of its offices, client sites, or project locations, subject to reasonable prior notice. The Employee shall report to Engineering Manager. The Employee agrees to perform all duties associated with the position diligently and to the best of their ability, and to comply with all Company policies, procedures, and the applicable Standing Orders under the Industrial Employment (Standing Orders) Act, 1946. The Employee's appointment shall be subject to a probationary period of 6 month(s) from the Date of Joining. During probation, either party may terminate employment with 7 days' written notice. The Company may extend the probation period at its sole discretion by written notice to the Employee.
2.
REMUNERATION AND STATUTORY DEDUCTIONS
The Employee's monthly Cost to Company ("CTC") shall be 80,000.00 INR, comprising the following components:
Basic Salary: 32,000.00 INR per month (basis for EPF and gratuity calculations — typically 40–50% of CTC).
House Rent Allowance (HRA): 16,000.00 INR per month (partially tax-exempt under ITA 1961 s. 10(13A) if in rented accommodation).
Special Allowance: 32,000.00 INR per month.
Salary Payment: Salary shall be credited to the Employee's designated bank account on or before the 10th day of the following month, in accordance with PWA 1936 s. 5.
Statutory Deductions: The Company shall make the following deductions at source: (a) TDS on Salary — under ITA 1961 s. 192, computed on estimated annual taxable income after applicable exemptions. Employee PAN (ABCAR5678G) is mandatory for TDS; without valid PAN, TDS shall be deducted at 20%. (b) EPF: 12% of basic salary as employee contribution under EPF Act 1952 s. 6 (employer also contributes 12%). (c) ESI: Not applicable (gross salary exceeds ₹21,000/month). (d) Professional Tax — as per applicable state legislation. All statutory contributions shall be remitted to the relevant authorities by the Company within the prescribed timelines.
Basic Salary: 32,000.00 INR per month (basis for EPF and gratuity calculations — typically 40–50% of CTC).
House Rent Allowance (HRA): 16,000.00 INR per month (partially tax-exempt under ITA 1961 s. 10(13A) if in rented accommodation).
Special Allowance: 32,000.00 INR per month.
Salary Payment: Salary shall be credited to the Employee's designated bank account on or before the 10th day of the following month, in accordance with PWA 1936 s. 5.
Statutory Deductions: The Company shall make the following deductions at source: (a) TDS on Salary — under ITA 1961 s. 192, computed on estimated annual taxable income after applicable exemptions. Employee PAN (ABCAR5678G) is mandatory for TDS; without valid PAN, TDS shall be deducted at 20%. (b) EPF: 12% of basic salary as employee contribution under EPF Act 1952 s. 6 (employer also contributes 12%). (c) ESI: Not applicable (gross salary exceeds ₹21,000/month). (d) Professional Tax — as per applicable state legislation. All statutory contributions shall be remitted to the relevant authorities by the Company within the prescribed timelines.
3.
LEAVE ENTITLEMENT
Earned / Privilege Leave (EL): 21 days per calendar year, accruing pro-rata monthly, as per the applicable state Shops and Establishments Act. Unused EL may be carried forward or encashed as per Company policy.
Sick / Medical Leave (SL): 12 days per calendar year. Not encashable.
Casual Leave (CL): 10 days per calendar year. Not encashable or carry-forwardable.
Public Holidays: As per the Company's holiday list notified for each calendar year, including national and state-specific public holidays.
Maternity Leave: 26 weeks (Maternity Benefit Act, 1961 — for establishments with 10+ employees). Paternity Leave: 5 days as per Company policy.
Sick / Medical Leave (SL): 12 days per calendar year. Not encashable.
Casual Leave (CL): 10 days per calendar year. Not encashable or carry-forwardable.
Public Holidays: As per the Company's holiday list notified for each calendar year, including national and state-specific public holidays.
Maternity Leave: 26 weeks (Maternity Benefit Act, 1961 — for establishments with 10+ employees). Paternity Leave: 5 days as per Company policy.
4.
BENEFITS AND STATUTORY ENTITLEMENTS
Gratuity (PGA 1972 s. 4): The Employee shall be entitled to gratuity upon completion of five (5) or more years of continuous service with the Company, computed as: 15 days' last drawn basic salary × completed years of service. Gratuity is payable on retirement, resignation, disablement, or death and is fully exempt from income tax up to ₹20,00,000 under ITA 1961 s. 10(10). The Company shall maintain an approved gratuity fund or secure a group gratuity insurance policy as applicable.
Bonus: The Employee's salary is above the wage ceiling prescribed under the Payment of Bonus Act, 1965 or the Employee is in a managerial / supervisory capacity. No statutory bonus under PBA 1965 is payable; performance-linked variable pay, if any, shall be as per Company policy.
Medical Benefits: Group Mediclaim Insurance: ₹5,00,000 per annum (self and family), fully paid by the Company.
Other Benefits:
Annual performance bonus (as per Company appraisal policy)
Mobile reimbursement: ₹1,000 per month
Professional development budget: ₹25,000 per year
Work-from-home facility: 2 days per week at manager discretion
Employee Referral Programme (₹15,000 per successful referral)
Bonus: The Employee's salary is above the wage ceiling prescribed under the Payment of Bonus Act, 1965 or the Employee is in a managerial / supervisory capacity. No statutory bonus under PBA 1965 is payable; performance-linked variable pay, if any, shall be as per Company policy.
Medical Benefits: Group Mediclaim Insurance: ₹5,00,000 per annum (self and family), fully paid by the Company.
Other Benefits:
Annual performance bonus (as per Company appraisal policy)
Mobile reimbursement: ₹1,000 per month
Professional development budget: ₹25,000 per year
Work-from-home facility: 2 days per week at manager discretion
Employee Referral Programme (₹15,000 per successful referral)
5.
INTELLECTUAL PROPERTY, CONFIDENTIALITY AND DPDPA 2023
Intellectual Property Ownership: All intellectual property created by the Employee during the course of employment shall vest exclusively in the Company.
Additional IP arrangements / carve-outs:
All intellectual property created by the Employee during the course of employment — including software code, algorithms, product designs, and technical documentation — shall vest exclusively in the Company upon creation. The Employee hereby assigns all such IP rights to the Company. This includes inventions conceived using Company resources even if created outside working hours.
Confidentiality: The Employee shall maintain strict confidentiality of all Company information during and after employment, in compliance with DPDPA 2023.
Additional confidentiality obligations:
The Employee shall maintain strict confidentiality of all non-public information of the Company, clients, and employees during employment and for 3 years thereafter. Upon separation, the Employee shall promptly return all Company property and data. Personal data handled by the Employee in the course of employment shall be processed only for authorised purposes in compliance with the DPDPA 2023.
Digital Personal Data Protection Act, 2023 (DPDPA 2023): The Employee acknowledges that in the course of employment they may handle personal data of the Company's customers, employees, and other data principals. The Employee shall process such personal data only for authorised purposes, in compliance with the Company's data protection policy and the DPDPA 2023. Any unauthorised disclosure or misuse of personal data may result in disciplinary action and personal liability under applicable law.
Non-Solicitation: During employment, the Employee shall not directly or indirectly solicit any client or employee of the Company for any competing purpose. This obligation applies during the employment period and is enforceable under ICA 1872.
Additional IP arrangements / carve-outs:
All intellectual property created by the Employee during the course of employment — including software code, algorithms, product designs, and technical documentation — shall vest exclusively in the Company upon creation. The Employee hereby assigns all such IP rights to the Company. This includes inventions conceived using Company resources even if created outside working hours.
Confidentiality: The Employee shall maintain strict confidentiality of all Company information during and after employment, in compliance with DPDPA 2023.
Additional confidentiality obligations:
The Employee shall maintain strict confidentiality of all non-public information of the Company, clients, and employees during employment and for 3 years thereafter. Upon separation, the Employee shall promptly return all Company property and data. Personal data handled by the Employee in the course of employment shall be processed only for authorised purposes in compliance with the DPDPA 2023.
Digital Personal Data Protection Act, 2023 (DPDPA 2023): The Employee acknowledges that in the course of employment they may handle personal data of the Company's customers, employees, and other data principals. The Employee shall process such personal data only for authorised purposes, in compliance with the Company's data protection policy and the DPDPA 2023. Any unauthorised disclosure or misuse of personal data may result in disciplinary action and personal liability under applicable law.
Non-Solicitation: During employment, the Employee shall not directly or indirectly solicit any client or employee of the Company for any competing purpose. This obligation applies during the employment period and is enforceable under ICA 1872.
6.
TERMINATION, NOTICE AND RETRENCHMENT
Notice Period — By Employee: After confirmation, the Employee shall give 60 days' written notice before resigning, or the equivalent of 60 days' salary in lieu of notice with Company consent.
Notice Period — By Employer: The Company shall give 60 days' written notice (or equivalent salary in lieu) to terminate employment without cause after confirmation, subject to applicable provisions of IDA 1947. During probation, 7 days' notice applies for both parties.
Termination for Cause: Termination for misconduct shall follow the domestic enquiry procedure under the Industrial Employment (Standing Orders) Act, 1946 and principles of natural justice.
Specific cause grounds identified by the Parties:
The Company may terminate employment for cause without notice subject to a domestic enquiry under the Industrial Employment (Standing Orders) Act, 1946. Grounds include: fraud, dishonesty, breach of Company policies, wilful insubordination, disclosure of confidential information, and conduct prejudicial to the Company's interests.
Retrenchment (IDA 1947 s. 25F): Where the Employee qualifies as a "workman" under IDA 1947, retrenchment shall comply with s. 25F — including: (a) one month's notice or pay in lieu; (b) retrenchment compensation of 15 days' average pay per completed year of service; and (c) notice to the appropriate government authority. Retrenchment compensation is exempt from income tax up to the prescribed limit under ITA 1961 s. 10(10B).
Final Settlement: Upon separation, the Company shall settle all outstanding salary, leave encashment, and statutory dues within 2 working days under PWA 1936 s. 5, and shall provide the Employee's provident fund and form 16 (TDS certificate) within the statutory period.
Governing Law: This Agreement shall be governed by the laws of India, and disputes shall be subject to the jurisdiction of courts at Telangana, including the Labour Court, Industrial Tribunal, or High Court as appropriate under applicable Indian labour legislation.
Notice Period — By Employer: The Company shall give 60 days' written notice (or equivalent salary in lieu) to terminate employment without cause after confirmation, subject to applicable provisions of IDA 1947. During probation, 7 days' notice applies for both parties.
Termination for Cause: Termination for misconduct shall follow the domestic enquiry procedure under the Industrial Employment (Standing Orders) Act, 1946 and principles of natural justice.
Specific cause grounds identified by the Parties:
The Company may terminate employment for cause without notice subject to a domestic enquiry under the Industrial Employment (Standing Orders) Act, 1946. Grounds include: fraud, dishonesty, breach of Company policies, wilful insubordination, disclosure of confidential information, and conduct prejudicial to the Company's interests.
Retrenchment (IDA 1947 s. 25F): Where the Employee qualifies as a "workman" under IDA 1947, retrenchment shall comply with s. 25F — including: (a) one month's notice or pay in lieu; (b) retrenchment compensation of 15 days' average pay per completed year of service; and (c) notice to the appropriate government authority. Retrenchment compensation is exempt from income tax up to the prescribed limit under ITA 1961 s. 10(10B).
Final Settlement: Upon separation, the Company shall settle all outstanding salary, leave encashment, and statutory dues within 2 working days under PWA 1936 s. 5, and shall provide the Employee's provident fund and form 16 (TDS certificate) within the statutory period.
Governing Law: This Agreement shall be governed by the laws of India, and disputes shall be subject to the jurisdiction of courts at Telangana, including the Labour Court, Industrial Tribunal, or High Court as appropriate under applicable Indian labour legislation.
7.
GENERAL PROVISIONS
Entire Agreement: This Agreement, together with the Employee Handbook and HR policies as amended from time to time, constitutes the entire agreement between the Parties regarding the employment. Amendment: Any amendment must be made in writing and signed by both Parties. Compliance: The Employee shall comply with all applicable laws including the DPDPA 2023, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act), and all Company policies. Governing Documents: The Company's HR policies, Code of Conduct, and Employee Handbook are incorporated by reference. In the event of a conflict, the mandatory provisions of Indian labour law shall prevail. Electronic Execution: This Agreement may be executed electronically under IT Act 2000 s. 5.
Emergency Contact: Kumar Venkata Reddy — Tel: +91 94000 12345
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.
EMPLOYER
Sneha Raju Iyer
HR Director / Authorised Representative
Nexus Technologies Private Limited
Date: ____________________
EMPLOYEE
Arjun Kumar Reddy
Software Engineer
Date: ____________________
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What Is an Employment Agreement in India?
An Employment Agreement (also called an Appointment Letter or Service Contract) is a written contract between an Indian employer and an employee that sets out the terms and conditions of employment. In India, this document is critical because it defines the salary structure, designation, work location, working hours, leave entitlements, confidentiality obligations, IP assignment, notice period, and termination conditions. A well-drafted employment agreement reduces the risk of disputes and ensures both parties understand their rights and obligations from the outset.
Indian employment law is complex, layered, and partly state-specific. Central labour laws such as the Employees' Provident Funds Act 1952, Employees' State Insurance Act 1948, Payment of Gratuity Act 1972, Maternity Benefit Act 1961, and the Industrial Disputes Act 1947 create mandatory entitlements for employees. State-specific laws, particularly the Shops and Establishments Acts, regulate working hours, leave, and certain employment conditions. The employment agreement cannot override these mandatory statutes, and any provision offering less than the statutory minimum is void to that extent under Indian law.
The Industrial Disputes Act 1947 is particularly significant for Indian employers because it restricts the ability to terminate employees in certain categories of establishment without government approval (retrenchment compensation, notice, and prior permission for large establishments). The Information Technology Act 2000 and the Digital Personal Data Protection Act 2023 (DPDPA) are relevant where employees handle personal data or electronic records. Intellectual property created by employees in the course of employment vests in the employer under the Copyright Act 1957 and other IP statutes, but the employment agreement should expressly record this. Indian courts, including High Courts and the Supreme Court of India, consistently enforce well-drafted employment agreements while protecting employees' statutory rights.
What's Covered in This Employment Agreement Template
Our India-specific employment agreement covers all essential terms required for a compliant and comprehensive employee engagement.
Designation, Department & Reporting
States the employee's designation, department, grade level, and reporting manager within the Indian organisation.
Compensation & CTC Breakup
Provides a full CTC breakup including Basic salary, HRA, special allowances, LTA, medical allowance, employer EPF/ESI contributions in ₹, and any variable pay component.
Working Hours & Location
Specifies standard working hours, work location (office, remote, or hybrid), and any flexibility arrangements, consistent with the applicable Shops & Establishments Act.
Leave Entitlements
Covers earned leave, casual leave, sick leave, maternity/paternity leave, and public holidays as required by Indian law and company policy.
EPF, ESI & Gratuity
Addresses statutory contributions to EPF (12% employer contribution under EPF Act 1952), ESI contributions where applicable, and accrual of gratuity under the Payment of Gratuity Act 1972.
Probation Period
Sets the probation duration, performance review process, and conditions for confirmation of employment.
Confidentiality
Requires the employee to maintain strict confidentiality of all company information, trade secrets, and personal data (DPDPA 2023) during and after employment.
Intellectual Property Assignment
Assigns all IP created in the course of employment to the employer, consistent with the Copyright Act 1957 and other applicable IP statutes.
Non-Solicitation
Restricts the employee from soliciting key clients or colleagues during and for a reasonable period after employment — a provision Indian courts are more willing to enforce than post-employment non-competes.
Notice Period & Termination
Specifies the notice period for resignation and termination, consistent with the Industrial Disputes Act 1947 and the applicable state Shops & Establishments Act.
Disciplinary & Grievance Procedures
References the company's standing orders (under the Industrial Employment (Standing Orders) Act 1946 for applicable establishments) or disciplinary policy.
Governing Law & Dispute Resolution
Specifies Indian law as governing and designates the appropriate forum (Labour Court, Industrial Tribunal, or civil court) for disputes.
How to Create an Employment Agreement in India
Follow these steps to prepare a legally compliant employment agreement for your Indian employee.
- 1
Determine Applicable Labour Laws
Identify which central and state labour laws apply to your establishment — particularly the Industrial Disputes Act 1947, the applicable state Shops & Establishments Act, EPF Act 1952, and ESI Act 1948.
- 2
Prepare the CTC Breakup
Calculate the detailed CTC including all salary components, employer EPF/ESI contributions, and variable pay. Ensure the Basic salary is adequate to meet EPF contribution obligations.
- 3
Draft Confidentiality & IP Provisions
Include a robust confidentiality clause covering trade secrets, client data, and DPDPA 2023 obligations, and a clear IP assignment clause ensuring the employer owns all work product created during employment.
- 4
Set Notice Period & Termination Terms
Specify a commercially appropriate notice period (typically 30 to 90 days for most roles) and grounds for summary termination, ensuring consistency with the Industrial Disputes Act 1947 for applicable categories.
- 5
Issue on Company Letterhead & Execute
Issue the employment agreement on company letterhead. Obtain the employee's signed acceptance before or on the date of joining. Retain signed copies in the company's employment records.
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Legal Considerations for Employment Agreements in India
These are the most important Indian labour law issues to address in an employment agreement.
This template is for informational purposes only and does not constitute legal advice. Consult a qualified Indian advocate or legal practitioner for advice specific to your situation.
Reviewed for Indian law
Industrial Disputes Act 1947 & Retrenchment
The Industrial Disputes Act 1947 provides significant protections for "workmen" (broadly, employees in non-managerial or non-supervisory roles). Establishments with 100 or more workmen require prior government permission for retrenchment (lay-offs). Retrenchment compensation of 15 days' wages per completed year of service is mandatory. Summary dismissal without following the inquiry procedure can result in reinstatement orders from the Labour Court or Industrial Tribunal.
Mandatory Statutory Contributions
Indian employers must make mandatory contributions to the Employees' Provident Fund (12% of basic salary under the EPF Act 1952) and the Employees' State Insurance Corporation (ESIC) for eligible employees (those earning up to ₹21,000 per month) under the ESI Act 1948. Non-compliance attracts penalties and prosecution. The employment agreement should reflect these obligations and the employee's corresponding deductions.
Prevention of Sexual Harassment (POSH)
Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 (POSH Act), all Indian establishments with 10 or more employees must constitute an Internal Complaints Committee (ICC) and have a written anti-sexual harassment policy. The employment agreement should reference the company's POSH policy and the employee's obligation to comply.
Post-Employment Restrictions
Post-employment non-compete clauses are generally void in India under Section 27 of the Indian Contract Act 1872. The employment agreement should instead focus on enforceable protections — confidentiality of trade secrets (enforceable indefinitely), non-solicitation of clients and employees (enforceable if reasonable), and IP assignment. Garden leave during the notice period is also enforceable.
Frequently Asked Questions
Create a Compliant Employment Agreement for India
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