Permanent Employment Agreement – free template

Overview

A Permanent (unlimited-term) Employment Agreement records the terms on which an employer engages an employee for an indefinite duration, as distinct from a fixed-term contract. Indian employment law is notably fragmented at the state level: for most establishments outside the factory sector, the primary source of statutory minimums on working hours, leave, holidays, and termination procedure is the Shops and Establishments Act of the state in which the establishment operates — each state has enacted its own version, with differing rules on notice periods, weekly hours, and permissible working conditions. Larger industrial establishments may additionally be subject to the Industrial Employment (Standing Orders) Act, 1946, which requires the employer to define and certify standing orders covering matters such as classification of employees, conditions of service, and disciplinary procedure, typically once the establishment crosses a specified employee-count threshold. Because coverage and thresholds vary by state and by the nature of the establishment, an employment agreement intended for use across India should be reviewed against the specific state legislation applicable to the employer's establishment rather than assumed to be governed by one uniform national law. Probation is a standard feature of Indian permanent employment contracts, typically ranging from three to six months, during which either party may terminate employment on shorter notice than would apply after confirmation; the specific permissible probation length and notice terms should be checked against the applicable state Shops and Establishments Act or standing orders, as these are not uniform. Notice periods and termination procedures following confirmation likewise vary significantly by state and by the employee's category (workman versus non-workman under labour law, where relevant), and an employer should confirm the specific requirements — including any requirement of cause, notice, or approval for termination — under the law applicable to the establishment before relying on a generic notice period. Statutory benefits form an important part of Indian permanent employment even though this template does not fix specific eligibility thresholds, since those can change and depend on establishment size and employee earnings. Provident fund contributions are governed by the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act), health insurance cover by the Employees' State Insurance Act, 1948 (ESI Act), and lump-sum retirement benefits by the Payment of Gratuity Act, 1972, each of which applies once the relevant establishment and employee eligibility conditions are met. Employers should confirm current thresholds and applicability with statutory guidance or professional advice rather than assume identical coverage across all establishments or states. The agreement should clearly define designation and reporting line, remuneration structure (including any statutory deductions), working hours and leave entitlement consistent with the applicable state law, confidentiality and intellectual property assignment obligations, and grounds and process for termination, including notice or pay in lieu of notice. Given that the employer will process the employee's personal data (identity, salary, bank, and potentially health information) over the course of the employment relationship, the agreement should also acknowledge the employer's obligations as a data fiduciary under the Digital Personal Data Protection Act, 2023, including limiting use of the employee's personal data to purposes connected with the employment relationship.

Information to customize

• Name of the Employer

• Registered address of the Employer

• Name of the Employee

• Address of the Employee

• Designation / job title

• Reports to (designation)

• Annual Cost to Company (CTC) in INR

• Probation period (months)

• Notice period after confirmation (days)

• Primary work location

• Date of joining

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Frequently asked questions

Is there one uniform notice period for employees across India?

No. Notice periods and termination procedures are primarily set by each state's own Shops and Establishments Act, and can also be affected by standing orders under the Industrial Employment (Standing Orders) Act, 1946 for larger establishments. These vary by state and by establishment, so the applicable rule should be confirmed locally rather than assumed to be the same everywhere in India.

Are provident fund, ESI, and gratuity mandatory for every employee?

These statutory benefits apply once specific eligibility conditions relating to establishment size and employee earnings are met, under the EPF Act 1952, the ESI Act 1948, and the Payment of Gratuity Act 1972 respectively. Because thresholds and coverage can change and are not identical across all establishments, employers should confirm current applicability rather than assume universal coverage.

How long can a probation period last in India?

There is no single national rule; typical probation periods range from three to six months in practice, but the permissible length and any conditions on extending it should be checked against the applicable state Shops and Establishments Act or the employer's certified standing orders, where applicable.

Does this agreement need to address the employee's personal data?

Yes. Employers process a significant amount of employee personal data over the course of employment, and the Digital Personal Data Protection Act, 2023 requires the employer, as a data fiduciary, to limit use of that data to purposes connected with the employment relationship and to handle it in accordance with the Act.

Does a permanent employment agreement need to be stamped in India?

Stamp duty requirements for employment agreements are determined by each state's own stamp legislation and vary by state; whether stamping is required or customary can depend on the state where the employee is based, so this should be confirmed locally rather than assumed to be uniform nationally.

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