Legal Guide

Employment Contracts: What Every Employee Should Know in India

by Mandvi Singh · 4 min read

Employment contracts in India

An employment contract in India is like any other contract where you have offer, acceptance, legal objects, free consent, consideration and competent parties. It is usually considered as a bilateral agreement where there is a legal obligation to offer services from one end and payment for services from the other. The relationship between employer and employee has always been a hot topic of discussion and with time it has evolved because of the ever-evolving nature of employment.

Kinds of employment contract

When we study types of employment contracts they can be broadly classified under three heads and they include:

Fixed-term contract

As the name suggests it’s a contract which has got a set period and is usually for the period less than four years. If the term of the contract exceeds the tenure of four years it is considered as permanent employment rather than fixed-term employment. The reason why people offer fixed-term employment is that it gives employment security and all the benefits that are permanent employment contract might provide them.

There are many nuances that people need to consider before drafting a fixed-term employment contract. In the case where the employment documents suggest any employee working for a tenure of three years but he or she continues to work over the set period and no one raises an objection. In such a situation it is considered that there has been an implied extension agreement created between employer and employee.

Permanent employment contract

In most situations, if it wasn’t assigning an employment agreement it is considered as a permanent employment contract because it is the most prevalent and used mode of offering employment all across the nation. Employment contract in India is heavily dependent upon this type of employment because it is a driving force of our economy.

Under this head, employment is considered to be ongoing until it is expressed to be terminated either from the employers and all employees. Under this head, a permanent employment contract can cover full-time employment or part-time employment. Usually, all kinds of statutory benefits and rights are provided to employees of this contract.

Casual employment contracts or freelancer’s contract

The name is quite suggestive of the fact that this kind of contract is ended only in the situation or scenarios where services are needed for a particular work or hours. These kinds of employment can be offered on a daily, weekly or monthly basis. The pattern of work in this kind of employment is usually dependent upon the employee rather than the employer. Payments in such kinds of employment are usually heavily dependent upon the kind of services the employee has rendered.

Then we talk about benefits and extra perks that other kinds of employment contracts enjoy, there isn’t much that is delivered in this kind of employment agreement. There is no requirement of employment contract bond or employment contract notice since it is an hourly basis task.

Major heads that are covered under an employment contract in India

Compensation details: this contains all the details of benefits offered by the company to its employees after they deliver their services for us for some time. It contains all the salary breakdown, medical insurance, sick leaves and vacations.

Designation: under this head company tries to specify what kind of position they are intending to offer to their employee. Usually, matches will do this are discussed before offering the employment letter and this is a formal mention of it.

Duration of employment: fixed-term employment contract, where there is a need of providing all the details later to the duration of employment, are specified not this head. There is no need of specifying the duration of employment in cases of permanent employment where generally there is no cap on duration.

Termination: Clauses that are related to the termination of employment to default in services or noncompliance with the orders given by the employer or in some cases employee tries to abandon the contract, all the nuances related to these issues are mentioned under this head. Employment authorization documents or any other documents that are needed to be presented while seeking admissions, in case of their absence contracts are also terminated you do unable to meet the eligibility criteria of that organisation.

Confidentiality clauses: there are times when you are under an employment contract, some kind of secrecy and confidentiality is expected out of your post-op if you feel under living that then there might be some serious actions that can be taken against you. All the repercussions related to breach of confidentiality and information that needs to stay undisclosed is discussed under this head.


Employment contract in India is like any other contract. The journey which has covered the modern industrial era has been immense. There were times where people were not on board with the fact of getting their employment contract duly written and signed to coming on to the times where employment contracts are being offered and signed on E contract basis is a huge journey covered under one generation. The presence of employment contracts is the reason why all the interests of employees and employers are protected and it also makes sure all the terms and conditions are followed on a long term basis.

Do you want an expert's point of view on your employment contract? Talk to lawyer now.

Mandvi Singh

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Mandvi Singh

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