Employment Contract Red Flags in India

You received an offer — CTC, joining date, role title. HR sends a 15-page employment agreement the night before onboarding. Most people sign on a phone because they need the job. Months later, during a exit dispute or IP claim, those pages matter more than the offer email.

Indian employment relationships are governed by the appointment letter, employment agreement, company policies incorporated by reference, and applicable labour laws depending on your category and state. Startups and MNCs both use templates; neither is automatically fair.

Watch for these patterns

Intellectual property: Clauses assigning all inventions, code, and ideas “during employment and relating to the business” — even work done on personal time with your equipment. Narrow the scope to work created in course of employment using company resources, with carve-outs for prior inventions you list in an annex.

Non-compete and non-solicit: Post-employment non-competes are often unenforceable or narrowly enforceable in India depending on scope, duration, and geography — but they still scare people and may be used in interim injunction attempts. Read duration, geography, and activity definition. Negotiate down before joining, not at exit.

Notice period mismatch: 90 days for you, 7 days for company, or “company may relieve early at its discretion without pay in lieu.” Symmetric notice, or pay in lieu at full salary, is a reasonable ask for mid-level hires.

Termination for convenience: “Company may terminate without cause with 30 days pay” vs “employee may resign with 90 days notice and company may withhold relieving letter.” Relieving letter and experience certificate timing should be explicit.

Training bonds: Recovery of training costs if you leave within X years — must be tied to actual specialized training cost, not general onboarding. Excessive bonds have been challenged; still expensive to fight.

Deductions from final settlement: Broad language allowing deduction for “any dues, damages, or losses” without itemized statement or timeline. Insist on itemization within 45 days and interest on delayed FnF where law applies.

Salary, benefits, and hidden policies

Check what is fixed vs variable, when ESOPs vest, and whether policies say bonus is discretionary even when recruiters promised it verbally. If it is not in writing, assume it is not binding.

Confidentiality is standard; defamation clauses gagging criticism even of illegal conduct are not. Garden leave, remote work, and place of posting — if you joined for Bangalore, a unilateral transfer clause to a distant city matters for families.

Dispute resolution: Mandatory arbitration, employer’s choice of seat, waiver of class action (where relevant) — these shape cost of disputes. Governing law and forum should be reasonable for where you work.

Before you sign

Upload the PDF to Doc Bias Analysis. See clause-by-clause which side the draft favours. List three to five non-negotiables and three nice-to-haves. Send HR a polite written list — many companies adjust templates for senior hires or scarce skills.

Keep the signed copy, offer email, and any policy PDFs HR referenced. If policies are “on the intranet only,” ask for snapshots at joining.

If HR says “everyone signs as-is,” decide whether the role is worth the risk — or consult a labour lawyer for a one-hour review. That consult is cheaper than a bond dispute or withheld relieving letter when you need to join another employer.

State-specific rules on shops and establishments, payment of wages, and sexual harassment committees may impose duties on the employer that your contract cannot waive. A contract clause saying “you waive all statutory rights” is often void — but fighting it still costs time. Know which rights are non-waivable in your state before you rely on a friendly HR conversation.

Founders and senior hires should pay special attention to acceleration, cliff, and good-leaver/bad-leaver definitions in ESOP schedules attached by reference. If the schedule is not attached, ask for it before signing — “see portal” is not enough for something that can be worth more than salary.