Probation to permanent: the Indian process
Reviewed by Mellow Editorial Team, HR & payroll content team
Confirming permanent employment after probation in India is primarily a contractual and HR process — there is no single statute that dictates the exact steps, but labour law, standing orders, and your employment contract all shape what you must do and when.
What probation actually means in Indian law
Probation is not defined uniformly across Indian labour law. The Industrial Employment (Standing Orders) Act, 1946 — which remains relevant alongside the new Labour Codes — traditionally required employers to specify a probation period in their standing orders. Under the four consolidated Labour Codes operative from 2025, the obligations around standing orders and employment conditions continue, though the applicable rules vary by establishment size and state.
In practice, probation periods in India typically run from three to six months, though many employers set them at six months to a year for senior roles. Your employment contract and, where applicable, your certified standing orders define the period. If neither specifies a period, courts have generally treated a reasonable period as six months.
During probation, the employee has limited protection against termination under most industrial dispute frameworks — but this does not mean the relationship is informal. Statutory contributions, including EPF and ESI, apply from day one.
Before the probation end date: what to do
Do not let the probation end date pass without a decision. Silent confirmation — where an employee continues working past the probation period with no communication — can be treated by tribunals as automatic confirmation of permanent employment.
At least two to four weeks before the end date:
Review performance. Gather structured feedback from the reporting manager. If you use a formal appraisal system, complete it. Document the assessment in writing.
Decide: confirm, extend, or separate. You have three options. Confirm permanently. Extend the probation — most contracts allow one extension, typically of the same duration, and the reason should be documented. Terminate the employment — during probation, notice requirements are usually shorter, but check your contract and applicable state rules carefully.
Check your contract language. Many contracts require a written confirmation letter to make permanent status effective. If your contract says this, the letter is not optional.
Issuing the confirmation letter
A confirmation letter is the formal record that converts probationary employment to permanent employment. Keep it concise and accurate. It should state:
- The employee's name, designation, and department
- The date on which permanent employment takes effect
- Any change in terms — for example, a revision to notice period, which commonly increases from one month during probation to two or three months on confirmation
- The applicable leave entitlements under your policy, if these change on confirmation
- A statement that all other terms in the original offer letter remain unchanged
Get the employee to acknowledge receipt in writing, either by signing a copy or replying by email.
Payroll and statutory implications of confirmation
From a payroll standpoint, confirmation may trigger several changes.
Salary revision. Many employers build a confirmation increment into the original offer. Process this from the effective date of confirmation, not from the next payroll cycle if these differ.
EPF and ESI. These contributions run throughout probation and continue unchanged after confirmation. EPF contributions remain at 12% each for employee and employer on applicable wages. ESI continues for employees below the applicable wage threshold. There is no registration reset or re-enrolment required.
Income tax. TDS deductions under the new tax regime continue based on the employee's declared investment details. Confirmation itself does not change the TDS computation, but a salary increment will. Update the projected annual salary in your payroll system immediately so the correct TDS is deducted going forward. Employers file Form 24Q quarterly and issue Form 16 at year end.
Gratuity eligibility clock. Gratuity is payable after five years of continuous service. The probation period counts toward this five-year threshold, provided there is no break in service. Make sure your records show the original joining date as the date of continuous service from.
Extending or not confirming
If you choose to extend probation, issue a written extension letter before the original period lapses. State the reason — typically, specific areas where performance needs to improve — and set a clear new review date. Avoid vague language like "further review required."
If you decide not to confirm the employee, act before the probation period ends. Follow the notice provisions in the contract. For roles covered by the Industrial Disputes Act thresholds — or equivalent provisions under the Labour Codes — be aware of any retrenchment compensation requirements depending on establishment size and employee category. When in doubt, take legal advice before issuing a non-confirmation.
Keeping a clear paper trail throughout — performance notes, the decision rationale, the confirmation or extension letter, and the employee's acknowledgement — protects the business if the decision is ever challenged.
---
Run HR and payroll in India with Mellow
Mellow brings HR, payroll and 12 AI agents into one platform — built to handle India properly, with payroll included, from £4 per employee per month. The AI agents don't just answer questions; they generate contracts, run cost estimates and draft letters for you.
[Start a free trial →](/register)