Offer letter format for India — what foreign employers must include

Indian offer letters are governed primarily by the Indian Contract Act 1872, the state-specific Shops and Establishments Act, the Industrial Disputes Act 1947 (for non-managerial roles), and the relevant statutes for PoSH, PF, ESI and gratuity. A well-structured offer letter prevents disputes; a sloppy one creates them.

Mandatory content — every offer letter

1. Parties — full legal name of the Indian employer with CIN, employee's full name and address.
2. Position and reporting — designation, department, name and title of reporting manager, place of work.
3. Effective and joining dates — the date the contract binds vs. the date the employee starts.
4. Compensation breakdown — Basic, HRA, LTA, Special, employer PF, gratuity provision, perks. Code on Wages 2019: Basic must be ≥ 50% of total CTC.
5. Variable / bonus structure (if applicable) — basis of computation, payment cycle, eligibility conditions.
6. Probation — duration (typically 3-6 months), confirmation mechanism, notice during probation.
7. Notice period after confirmation — 30 / 60 / 90 days. Buyout option clearly stated.
8. Working hours — standard 9 hours including breaks, with overtime rules.
9. Leave entitlement — casual / sick / earned leave breakdown.
10. Confidentiality — survives termination; defines protected information.
11. IP assignment — present and future assignment plus moral rights waiver.
12. Non-solicitation (post-employment, reasonable scope) — typically 12-24 months.
13. Governing law and jurisdiction — Indian law, courts of the registered office city.
14. PoSH reference — express acknowledgement that the employee has received the policy.
15. Termination clauses — without cause, for cause, exit process.

Compensation breakdown — what to show

Indian candidates compare offers in CTC terms. The breakdown shows them what they actually take home.

IP assignment — why it matters more in India

Indian copyright law (Section 17 of the Copyright Act 1957) defaults ownership of software to the employer — but only if a clear employment contract exists. Without explicit IP assignment, ownership is contestable. Use this language (or equivalent reviewed by counsel):

'The Employee acknowledges that all work product, inventions, discoveries, designs, software, code, documentation and other intellectual property created by the Employee during the course of employment, whether or not during working hours, that relate to the Company's business, shall be the exclusive property of the Company. The Employee hereby assigns to the Company all right, title and interest in such work product, including all copyrights, patent rights and other intellectual property rights, and waives all moral rights to the extent permitted by law.'

Termination — what to include

• Termination without cause — notice period × monthly salary in lieu, or notice served. Specify which.
• Termination for cause — defined categories (misconduct, fraud, conviction). No notice payable if for cause.
• Disciplinary process — domestic enquiry under principles of natural justice for terminations for cause.
• Resignation — same notice period as termination without cause.
• Garden leave — employer's right to send the employee home during notice while still paying salary.
• Return of property — laptop, ID card, documents, on the last working day.

Common errors that cause disputes

1. Basic below 50% of CTC — violates Code on Wages 2019.
2. At-will employment language — Indian law doesn't recognise at-will employment; this clause is unenforceable.
3. Foreign governing law — Indian courts won't apply foreign law to Indian employment disputes.
4. Non-compete (post-employment) — largely unenforceable in India. Don't try.
5. Missing PoSH reference — required for employers with 10+ employees.
6. Vague IP assignment — 'as per company policy' is insufficient; explicit clause needed.
7. Termination clause that omits notice period or disciplinary process — invites dispute.