Writing a compliant job offer in India
Reviewed by Mellow Editorial Team, HR & payroll content team
Sending a job offer in India is more than a formality — it is the document that sets the legal and financial terms of employment, and gaps in it create disputes down the line. A well-drafted offer covers compensation, statutory deductions, leave, notice periods and the governing law before the employee's first day.
What a compliant offer letter must include
Indian law does not prescribe a single template for offer letters, but several statutes — and from 2025, the four consolidated Labour Codes — determine what terms must eventually appear in the employment relationship. Getting them into the offer letter early prevents renegotiation later.
Identification of parties. Full legal name of the employing entity, its registered address, and the candidate's full name and address.
Designation and reporting structure. The job title, department and the role the candidate will report to. If the role is remote or hybrid, state that explicitly.
Date of joining. A fixed date or a condition ("within 30 days of acceptance") avoids ambiguity.
Place of work. Under the Labour Codes, the place of work is a material term. If travel or multi-location work is expected, say so.
Nature of employment. Permanent, fixed-term, probation period (and its length), or contract. Fixed-term contracts under the Labour Codes now carry certain protections comparable to permanent employment, so label the arrangement accurately.
Compensation: how to write the CTC breakdown
This is where most disputes originate. Write every component separately rather than quoting only a CTC headline.
List the basic salary, HRA, any special allowance, and other allowances. Basic salary matters because EPF contributions — 12% from the employee and 12% from the employer — are calculated on it (subject to the applicable wage definition under the Labour Codes). HRA has its own tax treatment and should not be lumped into a catch-all allowance.
State whether the figures are monthly or annual and whether they are gross or net. If you intend to quote CTC, define it and list what it includes — employer's EPF contribution, gratuity provision, insurance premiums. Candidates compare offers and an unclear CTC number erodes trust before employment even starts.
Variable pay, if any, should be described with the performance period, the metrics used to calculate it, and whether it is discretionary or contractual. "Performance bonus at management discretion" is not the same as "10% of annual basic subject to KPI achievement" — be precise about which you mean.
Statutory deductions and tax
The offer letter should tell the candidate what will be deducted from their gross pay each month. At minimum:
- EPF: 12% of applicable wages deducted from the employee; the employer contributes a matching 12%.
- ESI: applicable if the employee's wages are below the ESI wage threshold; contributions split between employer and employee.
- Income tax (TDS): deducted under the new tax regime by default unless the employee submits a declaration to opt for the old regime. The new regime has slabs rising to 30%, a section 87A rebate for eligible lower incomes, and a 4% health and education cess. Inform the candidate that TDS will be deducted monthly and that they will receive Form 16 after the financial year end.
You are not required to publish the full tax calculation in an offer letter, but telling the candidate which regime will apply by default prevents confusion at the first salary credit.
Leave, notice period and confidentiality
Leave entitlements. State the earned leave (EL), sick leave and casual leave the role carries. The Labour Codes prescribe minimum earned leave; your policy can be more generous but not less.
Notice period. Specify the notice period for both sides and what happens during probation. Asymmetric notice periods — longer for the employee than the employer — are legally permissible but should be stated plainly so there is no later dispute.
Gratuity. You are not required to calculate a gratuity amount in the offer, but it is good practice to note that the employee will be eligible for gratuity under the Payment of Gratuity Act after completing five years of continuous service.
Confidentiality and IP assignment. If the role involves access to proprietary information or the employee will create intellectual property, include brief clauses or reference a separate agreement to be signed on joining. Indian courts have enforced reasonable confidentiality clauses; post-employment non-competes have a weaker track record, so draft them carefully.
The acceptance mechanism and document checklist
Close the offer with a clear acceptance method: a signed copy returned by a deadline, or a digital acceptance via your HRMS. State that the offer is conditional on background verification and document submission.
List exactly what documents you need on joining day — educational certificates, previous employment relieving letter, PAN card, Aadhaar for KYC, and bank account details for payroll. Surprises on day one delay onboarding and the first salary run.
Retain the signed offer letter and all subsequent amendments as part of the employee's permanent record. Under the Labour Codes, employers are required to issue a written appointment letter; the signed offer letter can serve this function if it covers all material terms.
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