Employment & engagement

Offer Letter Review: What to Check Before Signing

An offer or appointment letter records the core terms on which an organisation is willing to hire a candidate. It usually confirms the role, compensation, probation, notice period, and the policies that will govern the employment relationship.

The employer drafts the letter, and its standard form is almost always tilted in the company’s favour. A candidate should read it closely because accepting it creates a binding contract, and many terms that seem routine can restrict future job moves or impose unexpected financial burdens.

Who it usually favours: The standard form usually favours the employer; the candidate should push back on one-sided notice, non-compete, and bond clauses.

Law that usually governs it
Indian Contract Act 1872Payment of Wages Act 1936State Shops and Establishments Acts

The clauses that decide risk

What each one settles in a offer letter / appointment letter, and the wording that shifts the risk.

Designation and Role

Why it matters. This defines the job the candidate is being hired to do and the department they will join. A vague description may later allow the employer to assign unrelated work.

Watch for. Broad wording like 'any other task assigned by management' can be used to unilaterally change the nature of the job without a formal promotion or consent.

Probation and Confirmation

Why it matters. This sets the trial period during which the employer can terminate the contract with a shorter notice or without cause. It also states how and when the employment becomes permanent.

Watch for. A clause that allows the employer to extend probation indefinitely or that makes confirmation solely dependent on 'management satisfaction' without objective criteria gives the candidate little security.

Notice Period and Buyout

Why it matters. This governs how either side can end the employment and the mandatory time the candidate must serve or pay for. It directly affects the candidate's ability to switch jobs.

Watch for. A long notice period that applies only to the employee, or a buyout amount calculated on gross cost-to-company instead of basic pay, can make leaving prohibitively expensive.

Non-Compete and Exclusivity

Why it matters. This restricts the candidate from working for competitors or taking up other work during and after employment. Post-employment restrictions on trade are generally void under the Indian Contract Act, 1872, but can still be used to intimidate.

Watch for. Any clause that bars the candidate from joining a competitor after leaving, even for a short period, is worth challenging. An exclusivity clause during employment that prohibits all outside activity, including volunteering or personal projects, may be overly broad.

Compensation and Deductions

Why it matters. This details the salary structure, allowances, and bonuses. It determines the candidate's fixed take-home pay and the employer's right to make deductions.

Watch for. A clause that allows the employer to deduct amounts beyond what the Payment of Wages Act, 1936 permits, such as penalties for minor infractions or unspecified 'losses', may be unlawful.

Intellectual Property (IP) Assignment

Why it matters. This decides who owns the work product, inventions, and ideas the candidate creates during employment. It can extend to work created in the candidate's personal time.

Watch for. An assignment clause that claims ownership over all IP created 'during the term of employment', without limiting it to work done using company resources or related to the company's business, is worth narrowing.

Confidentiality

Why it matters. This defines what information the candidate must keep secret, both during and after employment. A broad definition can cover publicly known facts or the candidate's own acquired skill and knowledge.

Watch for. A definition of 'confidential information' that is not limited to information specifically marked as confidential or that does not exclude information already in the public domain can be used unfairly against the candidate after they leave.

Governing Law and Dispute Resolution

Why it matters. This states which courts have jurisdiction over any dispute. It determines where the candidate would have to file a case or defend one.

Watch for. A clause that gives exclusive jurisdiction to a city far from the candidate's place of work can make it practically impossible for them to pursue a legal remedy.

Red flags for the candidate

  • A notice period that binds the employee but allows the employer to terminate immediately with pay in lieu.
  • A post-employment non-compete clause that restricts joining any competitor, which is generally unenforceable.
  • An employment bond that demands a large, unconditional payment if the candidate leaves before a fixed period, without linking it to actual training costs incurred.
  • A probation clause that allows the employer to extend the probation period repeatedly without any maximum limit.
  • An IP clause that claims ownership over all inventions and creative work, including those made outside working hours and unrelated to the company's business.
  • A deduction clause that permits the employer to recover unspecified 'damages' or 'losses' directly from salary.

How LexPilot reviews a offer letter / appointment letter

  1. 1Drop in the contract (PDF, DOCX or a scan). The document type, the parties and the governing-law clause are detected for you.
  2. 2Every clause is checked two ways — against the text of central Indian Acts, and for balance: which party it favours. You get a plain-English verdict, the main risks ranked, who the document favours, and what to ask for.
  3. 3The full report lists every clause with the finding and the provision relied on, says what could not be checked, and downloads as a PDF.

What the review cannot check for this type: State Shops and Establishments Acts are not yet indexed, so working-hours, leave and termination-notice checks that derive from them are not covered.

Frequently asked questions

Is a non-compete clause in an Indian offer letter enforceable after I resign?

A clause that completely restrains a person from practising their profession or trade after the employment ends is generally void under the Indian Contract Act, 1872. While an employer may include it to discourage joining a competitor, courts rarely uphold such a restriction. It is worth asking the employer to remove it before you sign.

Can my employer deduct money from my salary for a mistake I made at work?

The Payment of Wages Act, 1936, specifies the limited grounds on which deductions can be made, such as fines, absence from duty, or damage to goods as a result of the employee's neglect. A blanket clause allowing deductions for 'losses caused to the company' without a proper inquiry or proof of neglect may not be lawful and is worth questioning.

How can a contract review tool help me with an offer letter?

An advocate can upload the offer letter, and the tool will detect the document type and the parties. It then checks each clause against retrieved text of central Indian Acts, flagging points for an advocate to confirm, and assesses which party each clause favours. The output is a plain-English summary with ranked findings and a 'what to ask for' list, which the advocate can use as a starting point for their advice. State Shops and Establishments Acts are not yet indexed, so checks on working hours, leave, and termination notice from those state laws are not covered.

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