Employment agreement, appointment letter and NDA formats
An employment agreement or appointment letter records the terms of employment: role, pay, probation, leave, confidentiality and termination. In India, a restraint that stops an employee from working elsewhere after the employment ends is void under Section 27 of the Indian Contract Act, 1872, though restraints during employment and confidentiality obligations are enforceable.
Key points
- Post-employment non-compete clauses are void (Section 27, Indian Contract Act; Percept D’Mark (India) v. Zaheer Khan, (2006) 4 SCC 227).
- Confidentiality and non-solicitation of trade secrets can be enforced.
- Labour codes and State shops and establishments laws apply in addition to the contract.
The law: old and new provisions
| Subject | Law now | Before 1 July 2024 |
|---|---|---|
| Agreements in restraint of trade | Section 27 Indian Contract Act, 1872 | — |
Which court or authority
Executed between employer and employee.
What the document should contain
- Designation, duties and reporting
- Compensation and benefits
- Probation and confirmation
- Working hours and leave
- Confidentiality and intellectual property
- Notice period and termination
- Governing law and dispute resolution
Documents to attach
- Offer letter
- Identity and qualification documents
- Company policies referred to
Procedure
- Issue the offer; sign the agreement
- Collect joining documents
- Keep a signed copy on file
Common mistakes
- Relying on a post-employment non-compete
- Vague notice and termination terms
Frequently asked questions
Is a non-compete clause valid in India?
A non-compete that applies after the employment ends is void under Section 27 of the Indian Contract Act. Restrictions during employment and confidentiality clauses are generally enforceable.