Most Indian small businesses hire on WhatsApp and regret at the labour office: the employee who claims a different salary, the absconder with company data, the probation that legally never existed because no document said so. Two letters prevent nearly all of it — the offer letter (the proposal) and the appointment letter (the contract) — and drafting them well costs one template afternoon. Here is exactly what each should contain and the clauses that decide disputes.
Offer letter vs appointment letter
- Offer letter: issued at selection — position, CTC headline, joining date, conditions precedent (document verification, background checks), validity window for acceptance; deliberately brief
- Appointment letter: issued at/after joining — the full terms of employment; this is the operative contract both sides live under
- The sequence matters: offer accepted → documents verified → appointment issued on day one. Businesses that stop at offers run on half a contract
- Note: several states' S&E rules and the (notified-in-stages) labour codes push written appointment letters toward mandatory — treat them as such regardless
The appointment letter's essential clauses
Identity and role: designation, department, reporting, location — with a transfer clause (right to reassign role/location within reason) if you'll ever need it. Compensation: reference to a CTC annexure (keep the salary structure separable — you'll revise it without re-issuing contracts). Probation: period (3–6 months standard), extension rights, shorter notice during probation, and — critically — that confirmation requires a written letter (else 'deemed confirmation' arguments arise). Notice and termination: notice periods both ways (30–90 days by level), pay-in-lieu rights, termination-for-cause grounds (misconduct, absence beyond X days, breach), and the absconding clause (unauthorised absence beyond N days treated as abandonment after due notice). Duties boilerplate that isn't boilerplate: full-time engagement, policy compliance (handbook referenced), and the honesty declaration (false credentials = void appointment).
Confidentiality: defined broadly (customer lists, pricing, processes), surviving exit. IP assignment: everything created in the course of employment belongs to the employer — the clause tech and creative businesses cannot skip. Non-solicitation (customers/staff for 12 months post-exit): largely enforceable if reasonable. Non-compete post-employment: India's honest position — restraints after employment are generally void under Section 27; draft non-solicits and confidentiality well instead of relying on unenforceable non-competes. During employment, exclusivity holds fine.
CTC annexure hygiene
- Structure: Basic (typically 40–50% of CTC — remember new-code wage definitions push toward 50%), HRA, allowances, statutory (employer PF/ESI shown as CTC components honestly), bonus/variable with its computation stated
- State what's conditional: variable pay criteria, bonus per Payment of Bonus Act applicability
- Deductions declared: PF/ESI/PT/TDS as applicable — surprise deductions are the classic month-one dispute
- Revision language: salary reviews at company discretion — no implied annual-increment promises
Execution and the disputes it prevents
Signature discipline: two copies, employee signs both, one returned — with signed acknowledgements of the handbook and code of conduct alongside; digital acceptance (e-sign, email confirmation trails) works when process is consistent. Offer-withdrawal reality: a withdrawn offer post-acceptance can invite damages claims — withdraw only via the conditions built into the letter (verification failure, joining-date lapse). The disputes these documents pre-decide: salary claims (annexure), wrongful-termination arguments (notice/probation clauses), data theft (confidentiality + IP), poaching (non-solicit) and the labour-office conversations where the inspector's first question is always the same: 'appointment letter dikhaiye.' Have it, and most conversations end there.
How Aidwish helps
Aidwish builds employment documentation kits — offer/appointment templates tuned to your state and industry, CTC structures aligned to PF/ESI and code definitions, and the handbook/policy layer — so every hire starts on paper that protects both sides.