The Labour Codes changed every employment contract in India.
Upload an offer letter, appointment letter, employment agreement or bond and get every risky clause checked against the Contract Act, the four Labour Codes, and your state’s rules.
What people are surprised to learn
Section 27 of the Indian Contract Act, 1872 makes agreements in restraint of trade void.
Post-employment non-competes are the category that provision addresses, however reasonable the duration or geography looks. We flag the clause and point you to the provision, so you can raise it with an advocate. Exclusivity during employment is a separate question.
What this review checks
- Post-employment non-compete and non-solicit (Section 27)
- Employment bonds and penalty amounts (Sections 73–74)
- Notice-period and probation asymmetry
- Appointment letter particulars, mandatory since 21 November 2025
- Fixed-term gratuity at 1 year, not 5
- CTC structure against the uniform wage definition
- Clauses citing repealed labour statutes
- IP assignment scope and Copyright Act formalities
Quick answer
What should I check in an offer letter or employment contract in India before signing?
Check any non-compete that applies after you leave, since Section 27 of the Contract Act makes restraints of trade void; any bond or fixed sum payable if you leave early; whether notice and probation terms bind you more than the employer; how your CTC is split; who owns what you create, including outside work; and whether the letter still cites labour Acts that the four Labour Codes replaced on 21 November 2025.
Who this review is for
- Employees reviewing an offer letter or appointment letter before joining
- Freshers and trainees asked to sign a service bond or training agreement
- Fixed-term and contract staff checking gratuity and renewal terms
- Senior hires with non-compete, garden leave or equity clauses
- Small employers updating their letters for the Labour Codes
How it works
- 1
Upload the agreement
PDF, Word, a photo or pasted text, with its schedules and annexures.
- 2
Choose your State
Shops and Establishments law and Labour Code rules vary by State, so the report tells you exactly what to confirm locally.
- 3
Read the report
Restraints, bonds, notice, pay structure, IP and statutory gaps, each explained in plain English with the clause quoted.
- 4
Raise the points
A suggested redline and a polite email to the other side, phrased as questions rather than demands.
8 red flags to look for
A non-compete that runs after you leave
Section 27 of the Contract Act makes restraints of trade void, so a post-employment non-compete is largely unenforceable whatever its duration or area, but it can still be used to pressure you.
A service bond with a fixed sum payable if you leave early
Under Sections 73 and 74 of the Contract Act a stipulated sum is a ceiling, not an entitlement, and disproportionate bond amounts are usually read down to the loss shown.
Notice and termination terms that differ for you and the employer
You may have to serve a long notice while the employer can end the job quickly, with recovery from your final settlement if you do not.
No appointment letter, or one missing basic particulars
Section 6 of the OSH Code has required a letter of appointment for every employee since 21 November 2025, with particulars set by the rules of the appropriate Government.
References to the Industrial Disputes Act, Payment of Gratuity Act or EPF Act
The Labour Codes replaced 29 central labour Acts, so the letter may misstate your rights.
A fixed-term contract that assumes gratuity needs five years
The Code on Social Security removes the five-year wait when a fixed-term engagement ends on expiry and pays gratuity pro rata.
An IP clause covering everything you create, including in your own time
Copyright Act s.17(c) gives the employer work made in the course of employment; an assignment reaching beyond your job should be narrow, written and specific.
A CTC where basic pay is a small share of the total
The Code on Wages applies a uniform definition of wages, and a structure out of line with it may need revisiting once checked against the notified rules for your State.
Terms explained
- Offer letter
- A letter offering the job and its main terms, often followed by a fuller appointment letter or employment agreement.
- Appointment letter
- The letter every employer must issue on appointment under Section 6 of the OSH Code, with particulars set by the rules of the appropriate Government.
- CTC
- Cost to company: the total the employer spends on you, including contributions and benefits you do not receive as monthly pay.
- Service bond
- A promise to stay for a period, or pay a stated sum if you leave early, usually linked to training.
- Notice period
- The time either side must give before ending employment, or the pay given instead of it.
- Garden leave
- A period during notice when you remain employed and paid but are kept away from work and clients.
- Fixed-term employment
- Employment for a set period that ends on its own; the Labour Codes give fixed-term employees gratuity without the five-year wait.
- Labour Codes
- The Code on Wages, Industrial Relations Code, Code on Social Security and OSH Code, in force from 21 November 2025, which replaced 29 central labour Acts.
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Employment FAQs
What should I check in an offer letter or employment contract in India before signing?
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Check any non-compete that applies after you leave, since Section 27 of the Contract Act makes restraints of trade void; any bond or fixed sum payable if you leave early; whether notice and probation terms bind you more than the employer; how your CTC is split; who owns what you create, including outside work; and whether the letter still cites labour Acts that the four Labour Codes replaced on 21 November 2025.
Is a non-compete in my offer letter enforceable in India?
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Section 27 of the Indian Contract Act makes agreements in restraint of trade void, and post-employment non-competes are largely unenforceable whatever the duration or area. A restriction on working for a competitor while you are still employed is a separate question and is generally valid. Non-solicitation and confidentiality clauses are assessed on their own terms. The report quotes each restraint and explains which category it falls into, so you can raise it before signing.
Do I have to pay the bond amount if I leave before the bond period ends?
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Not automatically. Under Sections 73 and 74 of the Contract Act, a sum named in the contract is a ceiling, not an entitlement. Courts award reasonable compensation, and proof of loss is generally required, so a bond amount well above the employer’s real loss, such as genuine training costs, is usually read down. The report flags the amount and how it is worked out, so you can ask for it to be reduced or tapered over time.
What changed for employment contracts when the Labour Codes came in?
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The four Labour Codes came into force on 21 November 2025 and replaced 29 central labour Acts. Employers must now issue an appointment letter, a uniform definition of wages applies, and fixed-term employees can receive gratuity without the old five-year wait. Central Rules were notified as final in May 2026, but they apply only where the Central Government is the appropriate Government, and many States have only draft rules, so some details still depend on where you work.
Who owns the work I create while employed?
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Under Section 17(c) of the Copyright Act, work you make in the course of employment generally belongs to the employer first. Work done outside your job, in your own time and without company resources, is not automatically covered, though many contracts try to assign it too. An assignment must be in writing and signed, and should identify the work, the rights, the duration and the territory. The report flags IP clauses that reach beyond your role.
Does a fixed-term employee get gratuity in India?
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Under the Code on Social Security, the five-year service requirement does not apply when a fixed-term engagement ends on expiry, and gratuity is paid pro rata. The one-year point usually quoted comes from the definition of fixed-term employment in the Industrial Relations Code, and the two Codes do not line up exactly. A fixed-term contract that still assumes five years is out of date, so confirm the current position for your situation.
My offer letter mentions the Industrial Disputes Act and the Payment of Gratuity Act. Is that a problem?
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Those Acts were among the 29 central labour laws the Labour Codes replaced on 21 November 2025. A letter that still cites them refers to repealed law, which can leave your actual rights unclear. It is worth asking for an updated letter that refers to the Codes instead. The report lists every outdated reference it finds so you can raise them together.
Does my State change how my employment contract is read?
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Yes, in places. Working hours, leave, holidays and termination for many office and shop staff are governed by your State’s Shops and Establishments law, and State rules under the Labour Codes are at different stages across India. Some States have limited their Shops and Establishments law to larger establishments, and Bihar repealed its act by an Ordinance in 2026, so verify the current position. Choose your State and the report tells you which law to check, without guessing figures.
Can my employer change my salary, role or location after I join?
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Only as far as the contract allows, which is why a broad clause letting the employer change your pay, role or location at its discretion is worth questioning before you sign. Transfer clauses are common in Indian employment contracts, but they should say where and on what terms. The report flags variation and transfer clauses so you can ask for limits, such as consultation or relocation support.
Related India reviews
ClauseAudit provides information and analysis, not legal advice, and does not create an advocate–client relationship. Findings use calibrated language because enforceability depends on facts and forum. Consult a qualified advocate before acting on any finding. See India pricing.
Employment guides for India
- Is a Non-Compete Valid in India? What Section 27 Actually SaysSection 27 of the Indian Contract Act makes agreements in restraint of trade void. Here is what that means for the non-compete in your employment contract.
- Your Employment Bond Says ₹2 Lakh. What Would a Court Actually Award?Sections 73 and 74 of the Indian Contract Act cap recovery at reasonable compensation up to the bond amount. Here is how that applies to employment bonds.
- 90 Days Notice From You, 30 From Them. Is Asymmetric Notice Legal?Long employee notice periods against short employer notice are standard in Indian contracts. Here is what governs them and what to check in yours.
- The Labour Codes Came Into Force in November 2025. Is Your Offer Letter Updated?The four Labour Codes replaced 29 central Acts on 21 November 2025. Most Indian employment templates still reflect the old law. Here is what changed.
- Appointment Letters Are Now Mandatory in India. What Must Be In YoursThe Occupational Safety, Health and Working Conditions Code requires employers to issue appointment letters to employees. Here is what that means in practice.
- Fixed-Term Employee? Your Gratuity Now Starts at 1 Year, Not 5The Labour Codes reduced the qualifying service for fixed-term employee gratuity from five years to one. Here is what changed and how to calculate yours.