What must an India employment contract include to be legally compliant?

A compliant employment contract in India needs to specify designation and job duties, compensation structure (basic pay, allowances, and statutory deductions like PF and professional tax), working hours consistent with the state's Shops & Establishments Act, leave entitlement (earned, sick, and casual leave at minimum), notice period for resignation and termination, and confidentiality/IP assignment clauses where relevant. For foreign companies used to at-will employment in their home jurisdiction, it's worth noting India has no true at-will employment — termination without cause still requires notice or pay in lieu, and for larger establishments, additional government approval in some cases.

India's four new labour codes (Wages, Industrial Relations, Social Security, and Occupational Safety) are being implemented in phases and will standardize several of these requirements once fully in force, including a uniform definition of 'wages' that affects how PF and gratuity are calculated. Until full rollout is complete across all states, contracts should be drafted to comply with current state-level rules while anticipating the codes' effect on wage structuring, since restructuring compensation after the fact is more disruptive than building compliant contracts from the start.