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For professionals in the private sector, most of your rights and duties relating to your employment are governed by your employment contract.

Employment Contracts

This explainer discusses the different kinds of employment contracts in India and your rights while joining a job. It primarily deals with the law laid out in the Indian Contract Act, 1872.

Offer & Acceptance

Read and Understand the Employment Contract
Research while applying for jobs
Important details in an Employment Contract
Job Offer
Importance of a Written Contract
Accepting your Job Offer in Writing
Documents for Prospective Employer

Contract Terms

Content of an Employment Contract
Restrictive Terms in a Contract
Confidentiality Clause/Non-Disclosure Clause
Non-Compete Clause
Non-Solicitation Clause
Training Bonds

Termination

Notice Period to Terminate Employment
Fired from your Job
Remedies for Violation of Contract

FAQs

Can I withdraw my acceptance of a job offer after I have accepted it?

If you have accepted the job offer before you have signed an appointment letter or employment contract, you can withdraw your acceptance. This applies to the employer as well. The employer may revoke the job offer after you’ve accepted it but before you’ve signed any paperwork. If you accepted a job offer verbally or through writing and you and the employer did not intend to enter into any further formal contract, then the acceptance can be considered as final. Due to this finality, the employer may take action against you for withdrawing from a final contract. However, if you did intend to enter into a contract after a verbal/written acceptance of a job offer, the employer may not take any action towards you, for rejecting the job offer at this stage.

What will happen If I violate the confidentiality/non-disclosure clause in my employment contract?

If you violate the confidentiality/non-disclosure clause in your employment contract, your employer may file a civil or a criminal case against you. Your employer may file a civil case if they want to stop you from sharing any information or if they want to get monetary compensation from you for violating the terms of the contract. Your employer can also file a criminal case against you for violating the confidentiality clause and you may be charged with:

Theft (ex. documents)
Hacking
Causing damage to a computer system
Tampering with computer source document
Violating the privacy policy of the company

However, it is important to note that using your own knowledge, skill, and experience at your new job, even if it was acquired during the course of employment at your previous company will not be considered confidential information or trade secrets.

Why is it important to understand the terms in your employment contract?

While discussing the terms given to you in the offer letter by your employer or before signing the contract, it is important to negotiate if you are unhappy with the terms. Keep in mind the following:

Understand and state the value you bring to the organization
Be aware of the technical terms (legal and non-legal) in the contract
Make your contract is personalized
Make sure you are not restricted from gaining employment in any other place once you resign
If anything sounds unfair or unreasonable, talk to your employer
Changing the terms of your contract is hard after signing it.

If I change my job, will I have to get a new Public Provident Fund made?

No, your PF account stays the same, even if you change jobs. At the time of your first job where your PF account has been opened, you are allotted a Universal Account Number (UAN) which stays the same throughout your career.

What is a HR policy?

HR policy or Human Resource policies are an organization’s guidelines to manage its employees. It provides guidance to employees and employers on how the organization functions and provides for strict rules on things you can and cannot do in the organization. For example, the HR policy will specify the manner in which you have to inform your employer that you are taking leave. Many employment contracts refer to the HR policy and not following the HR policy may lead to disputes with your employer, which in turn may result in termination.

What should I do if I want to leave my job?

If you decide to quit your job, inform your employer in the manner provided in your employment contract. You may either have to give a notice period or comply with any other formality as given in your employment contract.

What is a joining bonus?

A joining bonus is an amount of money paid to a new employee as an incentive to join that company. A joining bonus may be offered in these situations:

When your new employer wants you to join as soon as possible, they may offer you a joining bonus to quit your old office and forgo the notice period.
When a company, especially a start-up, wants to persuade you to join.

What is the difference between a Public Provident Fund Account and an Employees’ Provident Fund Account?

EPF and PPF are both long-term saving schemes offered by the government. The difference between the two is that EPF scheme is mandatory for employees working in an organisation of more than 20 people and PPF is an optional scheme available to eligible citizens.

If my employer is vague while giving me the job offer, does it mean that he is offering me the job?

The job offer should express the willingness by the employer to enter into a legally binding contract with you. It should not be a passing statement made by your employer, but has to be a definitive statement offering you the job. For example, if your employer says ‘I think I can hire you’, this is not indicating his willingness to hire you and this would not be a job offer.

Can my employer ask me to sign a document after I quit my job, where I am not supposed to discuss the work done by me?

Yes, your employer can ask you to sign a non-disclosure agreement, in situations after you leave the office. This is done to maintain the confidentiality of the work done by the employer. Indian Courts have ruled that the only post-termination restrictions that can be allowed are non-disclosure terms and non-solicitation terms.

Can my employer ask me to not work with a rival firm if I quit the job?

No, employers cannot deny you the freedom and right to move to any firm if you decide to quit. Such restrictive terms in the contract are very problematic for employees and Indian courts have said that the protection of the rights of an employee seeking employment is more important than protecting the interests of the employer. If such a term is there in your contract, then you should talk to your employer. It is typically referred to as a non-compete clause. If your employer does not want to negotiate or remove such a term in your contract, then your only remedy is to go to court.

Why is it better to have a written employment contract, as compared with an oral one?

Contracts may be in written or oral form but in a scenario where there is no documentation of the offer and acceptance of the job, it may be more difficult to discover whether your employer and you have agreed and promised to honour the words spoken. This is why it is better to have an employment contract that is written and signed by your employer and you. It is also a useful proof for any proof of employment or filing of taxes.