Corporate agreements

Employment Agreement

An Employment Agreement is a contract that formalises the relationship between an employer and an employee. It defines the terms of service, including compensation, duties, confidentiality obligations, and termination conditions.

This document is a private contract and is not filed in any court. It is governed primarily by the Indian Contract Act, 1872, and must comply with the minimum standards set by the Code on Wages, 2019 and other applicable labour codes.

Draft this in LexPilot — freeHow AI drafting works
Governing law
Indian Contract Act, 1872 + Code on Wages, 2019
Sections
s. 27

When this is the right filing

  • When hiring a full-time employee and you need to document the detailed terms of their service beyond a basic appointment letter.
  • When the role involves access to sensitive information, requiring enforceable confidentiality and intellectual property assignment clauses.
  • When you need to bind the employee to a non-solicitation clause to protect client and employee relationships.
  • When you need to include a non-compete clause that operates strictly during the period of employment, as post-employment restraints are void under Section 27 of the Indian Contract Act, 1872.
  • Do not use this agreement if you are engaging an independent contractor or consultant; a service agreement is the appropriate instrument for that relationship.

What the court looks for

  • Clarity on whether the basic salary and dearness allowance constitute at least 50% of the total cost-to-company (CTC), as required for provident fund and gratuity computation under the wage codes.
  • A non-compete clause that is explicitly limited to the duration of employment, as any post-employment restraint of trade is void under Section 27 of the Indian Contract Act, 1872.
  • Robust and specific confidentiality and intellectual property assignment clauses, which are the enforceable mechanisms for protecting the employer's proprietary information.
  • Terms of notice, leave, and gratuity that meet or exceed the statutory minimums prescribed by the applicable State Shops and Establishments Act and the Code on Social Security, 2020.

The structure the court expects

The components of the filed format, in the order they appear. LexPilot fills every one of them from your facts and papers.

  1. 1Recitals
How it opens
WHEREAS the Company desires to employ the Employee in the capacity set out below, and the Employee has agreed to accept such employment, on the terms and conditions hereinafter appearing.

Bracketed items are filled from your case.

Frequently asked questions

Is a post-employment non-compete clause enforceable in India?

No. Section 27 of the Indian Contract Act, 1872 voids any agreement that restrains a person from exercising a lawful profession, trade, or business. A non-compete clause is only valid during the period of employment. To protect business interests after termination, you must rely on well-drafted confidentiality, intellectual property assignment, and non-solicitation clauses.

What is the correct salary structure to comply with the Code on Wages, 2019?

The Code on Wages, 2019 defines 'wages' and requires that the basic pay and dearness allowance together constitute at least 50% of the total cost-to-company (CTC). The remaining 50% can include other allowances. This structure is critical for the correct computation of statutory dues like provident fund and gratuity.

Can the terms of this agreement override statutory benefits like gratuity or minimum notice?

No. The terms of an employment agreement cannot offer less than the statutory minimums provided by laws such as the Code on Social Security, 2020, the Payment of Gratuity Act, 1972, or the applicable State Shops and Establishments Act. Any contractual clause that provides a benefit lower than the statutory floor is void to that extent, and the statutory minimum will prevail.

Draft this in LexPilot — free

Free trial · Drafting assistance, not legal advice — always verify before filing.

More corporate agreements formats

All corporate agreements formats →