The contract you sign at the start
is the exit you get at the end.

An offer letter and an appointment letter do different work, and conflating them causes trouble. The offer records an intention to employ and the conditions attached to it: background verification, evidence of relieving from a previous employer, regulatory clearance where the role needs it. The appointment letter is the contract. Role and reporting line, place of work, date of joining, remuneration and its components, hours, leave, probation, notice, and the policies that form part of the terms all belong in it, along with any policy incorporated by reference, which should be acknowledged in writing rather than assumed to bind. Background checks engage the Digital Personal Data Protection Act, 2023, and the lawful basis, whether consent or the legitimate use for employment purposes, has to be identified in the process itself. Where an engagement is genuinely that of a consultant, the agreement should not read like an employment contract under another name, and the working arrangement should not look like one either.

Probation is principally a contractual construct rather than a statutory one, and it does only what the contract says it does. If the letter says nothing about what happens when the period ends, an employee may be treated as confirmed by conduct, and the flexibility the employer thought it had reserved is gone. Extension is ordinarily effected before the original period expires and for reasons that can be stated, though the position turns on the contract and on any applicable standing orders. State legislation and certified standing orders may also regulate probation and confirmation, and may impose notice requirements the contract cannot displace.

Compensation is where employment law meets tax, exchange control and the labour codes at the same time. Bonus schemes drafted loosely tend to be read as contractual entitlements, so the discretion, the performance conditions and any requirement to be in employment on the payment date should be spelled out rather than left to implication. Share-based awards have to work under the Companies Act, 2013 and, for listed issuers, the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, with vesting, leaver categories and clawback drafted so that a departure calls for no improvisation. The Code on Wages, 2019 sits underneath all of it, because the revised definition of wages decides how much of a package can sit outside wages before the excess is added back.

Confidentiality obligations are generally enforceable and survive termination, and they do not offend Section 27 of the Indian Contract Act, 1872 provided they are not drawn so widely as to operate in substance as a restraint on trade. That makes them among the most useful protective clauses an employer has. Confidential information is best defined by category rather than by closed list, with what is genuinely public carved out, return and deletion dealt with on exit, and use restricted as well as disclosure. Where information amounts to a trade secret, protection in India rests on contract and equitable principles rather than on a dedicated statute, which is one more reason to draft the clause with care. Intellectual property needs separate handling, because the default position differs by right. Under Section 17 of the Copyright Act, 1957 the employer is generally the first owner of works made by an employee in the course of employment under a contract of service, subject to the exceptions in that section and to any agreement to the contrary, though authors keep moral rights that cannot be assigned. The Patents Act, 1970 has no equivalent automatic vesting, so inventions require assignment. The clause should operate as a present assignment rather than a promise to assign later, oblige disclosure of inventions, and carry a schedule of pre-existing work the employee brings with them.

Section 27 of the Indian Contract Act, 1872 provides that an agreement by which a person is restrained from exercising a lawful profession, trade or business is void to that extent, subject to the statutory exception for a restraint attached to the sale of goodwill. Courts have generally declined to enforce restraints operating after employment ends, though outcomes have varied with what is actually being protected. Restrictions operating during employment are treated differently. Exclusivity and a bar on competing activity while employed are ordinarily enforceable, and a negative covenant of that kind may be supported by injunction under the Specific Relief Act, 1963. Non-solicitation sits in a less settled space, and it is fair to say so. Clauses aimed at soliciting clients or employees have been approached differently in different matters, and outcomes have turned on whether what is really being protected is confidential information and trade connection, or simply competition. Protection more usually rests on confidentiality obligations and access controls than on a post-termination covenant. Garden leave and a realistic notice period are both paid, and therefore rest on different footing.

An exit process that genuinely recovers devices and revokes access does more than an unenforceable clause, which has never retrieved a customer list.

A resignation is an offer to bring the employment to an end, and whether it takes effect on acceptance depends on the contract and on any applicable service rules, so acceptance is worth recording and communicating. Until then an employee may try to withdraw it, and an employer with no documented position is left arguing about a conversation. The contract should say whether notice can be bought out and at what rate, whether the employer may waive notice or impose garden leave, and how accrued leave interacts with the notice period. Acceptance also fixes the last working day, which drives the settlement figure and the exit from provident fund and insurance.

Withholding a relieving letter to enforce notice is of limited effect, and statutory dues are generally not capable of being withheld.

Dismissal for misconduct needs a process, not simply a reason. Where standing orders or service rules apply, the conduct alleged should sit among the listed acts of misconduct, and the prescribed procedure has to be followed: a charge sheet setting out the allegations specifically, an opportunity to explain, an enquiry conducted fairly with the material put to the employee, a reasoned finding, and a punishment proportionate to the charge proved. Practitioners watch the line between a termination simpliciter under the contract and a dismissal that casts a stigma, since the second draws scrutiny of the process behind it. Where the enquiry is run internally, the person deciding should not be the person who investigated, and the employee should have seen every document the decision rests on.

Where an employee falls within the category of worker, termination for reasons unconnected with misconduct engages the retrenchment machinery under the Industrial Relations Code, 2020. That means notice or wages in lieu, compensation calculated by reference to completed years of continuous service, and service of notice on the appropriate government in the prescribed manner. The notice period, the compensation rate and the qualifying period of continuous service that brings the provision into play are all set by the Code and have to be taken from it. Selection within a category ordinarily follows last-in-first-out unless reasons for departing from it are recorded, and retrenched workers have a preference in re-employment, each subject to the conditions attaching to those provisions. Establishments above the threshold the Code prescribes need prior government permission, and the appropriate government may vary that threshold by notification. Continuous service is worth checking rather than assuming, because breaks, transfers between group entities and periods on a contractor payroll all bear on the calculation.

Settlement figures are usually computed before terms are discussed. On one side sit salary and reimbursements to the last working day, encashment of accrued leave, gratuity where the qualifying period of continuous service is met, which is applied on a pro-rata basis to fixed-term employees, statutory bonus where applicable, notice pay or recovery, and variable pay that has crystallised. Against that sit recoveries for advances, assets not returned and, where they are enforceable, training bonds. Then come the provident fund and employees’ state insurance exits and the tax withholding. A release is generally effective against contractual claims, though statutory entitlements are generally not capable of being waived. Computing the number first also shows what room there is to negotiate.

A release signed under pressure on the last day is worth a good deal less than one the employee had time to consider.

A workforce reduction is a sequencing exercise, usually ordered so that the business case and the selection criteria are recorded before any names are matched against them, with the criteria objective and settled first. The population is split by category, because the statutory route differs, and the position is confirmed state by state. Where permission or notification is required, the timeline runs backwards from it. Severance design, communication and references come after all of that. Line managers are briefed on what they can and cannot say, since the answers given in the room become part of the record.

Selection is also reviewed for patterns that would be hard to explain later. Announcing a reduction before the process is complete increases the risk of challenge.