A logistics company in Noida terminated a delivery driver after three months. The driver filed an industrial dispute. The company had no written appointment letter, no documented probation terms, and no record of the notice period that had been agreed verbally. The Labour Court ruled in the driver’s favour Rs. 1.8 lakh in compensation plus reinstatement, simply because the employer could not produce a basic written employment record.
The employer was not negligent. He had hired the driver the same way he had hired dozens of others verbally, with a handshake and a starting salary. What he did not know was that the law had changed. Under India’s new Labour Codes, which came into force on 21 November 2025, a written appointment letter for every worker is no longer a best practice. It is a legal obligation.
The Industrial Relations Code, 2020 one of four Labour Codes now in force makes mandatory appointment letters a statutory requirement across all sectors, including informal employment. The Union Minister for Labour and Employment stated explicitly in Parliament in February 2026: “To every such youth who gets a job, an appointment letter must be given under all circumstances.” Sixty percent of workers surveyed post-implementation reported that employment conditions had become clearer. The remaining forty percent are likely working for employers who still have not issued compliant appointment letters.
If you are an employer, HR manager, startup founder, or business owner in India — this guide explains exactly what the new rules require, what your employment contracts must contain, what is different for fixed-term employees, and what happens if your current appointment letters do not meet the new standard.
Need compliant employment contracts and appointment letters for your business? Futurex provides complete HR compliance and labour law services appointment letter templates, fixed-term contract drafting, Standing Orders support, and payroll compliance. Free consultation available. Call +91 9266339256.
What This Guide Covers
Why mandatory appointment letters are a new legal requirement under the Labour Codes
Appointment letter vs employment contract — what is the difference
Every mandatory clause an employment contract in India must include in 2026
Full clause-by-clause reference table for HR teams
What is different for fixed-term employees — gratuity, equal pay, and contract terms
Standing Orders — which companies need them and what they must cover
Clauses that are legally void or unenforceable under Indian law
Confidentiality and non-compete agreements — what courts will and will not enforce
Common appointment letter mistakes that create labour disputes
Frequently asked questions about employment contracts in India
The New Legal Framework: Why the Labour Codes Changed Everything
Before 21 November 2025, the obligation to issue appointment letters was inconsistent across Indian labour law. The Industrial Employment (Standing Orders) Act, 1946 required standing orders — which addressed employment terms — but only for establishments with 100 or more workers. Smaller employers, informal workers, and daily wage workers were often left with no written record of their employment terms whatsoever.
What Changed on 21 November 2025
The Government of India notified all four Labour Codes effective 21 November 2025. The Industrial Relations Code, 2020 — which replaces the Industrial Disputes Act, 1947, the Industrial Employment (Standing Orders) Act, 1946, and the Trade Unions Act, 1926 — now makes written appointment letters mandatory for every worker across all sectors. The Code on Wages, 2019 redefines wages with the 50 percent basic pay rule. The Social Security Code, 2020 extends PF, ESI, and gratuity benefits. The OSH Code, 2020 governs working conditions.
Together, these four codes create a compliance environment where an employment contract India employers issue must reflect a significantly expanded set of statutory requirements. Old appointment letter templates drafted before November 2025 are, in most cases, no longer legally compliant.
Who Does the Appointment Letter Requirement Apply To?
The mandatory appointment letter requirement applies to all workers — not only permanent employees. It covers:
- Permanent employees in all sectors — manufacturing, services, IT, retail, hospitality
- Fixed-term contract employees
- Daily wage workers and casual workers
- Workers engaged through contractors (contract labour)
- Workers in informal employment sectors
- Supervisory and managerial staff earning up to Rs 18,000 per month
There is no minimum headcount threshold for this obligation. A business with one employee must issue that employee a written appointment letter that reflects the mandatory terms.
Appointment Letter vs Employment Contract: What Is the Difference?
Many employers use the terms “appointment letter” and “employment contract” interchangeably. Under Indian law, they serve overlapping but distinct functions.
| Parameter | Appointment Letter | Employment Contract |
|---|---|---|
| Legal status | Statutory requirement under IR Code | Contractual document governed by Indian Contract Act, 1872 |
| Issued to | All workers — mandatory without exception | Typically managerial and senior staff — common practice, not always mandatory |
| Primary content | Designation, wages, working hours, leave, notice period, probation, grievance mechanism | All appointment letter terms plus IP, confidentiality, non-compete, garden leave, restrictive covenants |
| Format | Relatively standard — can follow Model Standing Orders format | Negotiated document — more detailed and role-specific |
| Enforceability | Statutory terms are enforceable regardless of what the letter says | Contractual terms are enforceable if they do not conflict with statutory minimums |
| Consequence of absence | Employer loses evidentiary basis in any labour dispute; penalty exposure | Disputed terms default to statutory minimums — employer cannot rely on verbal agreements |
For practical purposes, most businesses should issue a single comprehensive document that functions as both — an appointment letter that meets the IR Code’s mandatory content requirements, combined with the additional clauses required for a legally sound employment contract. This combined document eliminates the gap between statutory obligation and contractual protection.
Every Mandatory Clause an Employment Contract in India Must Include (2026)
The following clauses are either directly mandated by the Industrial Relations Code 2020, required by the Code on Wages 2019, or necessary to protect the employer’s position in an industrial dispute. Missing any of these creates either a statutory violation, an evidentiary gap in dispute proceedings, or both.
Clause 1: Designation, Role, and Classification
What it must state:
- The employee’s exact designation and department
- The nature of work — skilled, semi-skilled, unskilled, technical, clerical, supervisory, managerial
- Whether the role is permanent, fixed-term, probationary, or casual
- The reporting structure — direct supervisor or manager
- The place of work — single location, multiple locations, or work from home
Why it matters:
The IR Code defines workers by category. Misclassification — calling a worker “consultant” to avoid labour law obligations, or calling a supervisory worker “managerial” to exclude them from IR Code protections — carries real penalties. The correct classification also determines which statutory obligations apply: fixed-term workers have different rights from permanent employees, and the IR Code protects workers earning up to Rs 18,000 per month in supervisory capacity as opposed to the old Rs 10,000 threshold.
Clause 2: Wages — Gross, Basic, and Allowance Breakdown
What it must state:
- Gross monthly CTC (Cost to Company) and take-home salary
- Basic salary — must be at least 50 percent of gross wages under the Code on Wages 2019
- Each allowance component — HRA, conveyance, special allowance, medical allowance, etc.
- Variable pay or incentive structure, if applicable
- Statutory deductions — PF (12% of basic), ESI (0.75% of gross), Professional Tax where applicable, TDS
- Payment frequency — monthly, bi-monthly
- Mode of payment — bank transfer, cheque
Why it matters:
The Code on Wages 2019 introduces a critical rule: if the total of allowances (HRA, conveyance, bonuses, etc.) exceeds 50 percent of total remuneration, the excess must be added back to wages for the purpose of statutory calculations — PF, ESI, gratuity, and overtime. This means an employer cannot structure salary as 20 percent basic and 80 percent allowances to reduce PF liability. Employment contracts that use pre-2025 salary structures are creating undeclared PF and gratuity liability from day one of employment.
Clause 3: Working Hours, Overtime, and Shift Structure
What it must state:
- Standard daily working hours — 8 hours per day as prescribed under the new Codes
- Weekly working hours and weekly off entitlement
- Shift structure for multi-shift operations
- Overtime eligibility and overtime rate — double the ordinary rate of basic plus DA
- Maximum overtime hours per quarter
- Whether the role involves night shifts, and applicable safeguards for women employees
Why it matters:
The new Labour Codes permit a compressed work week — 4 days a week with 12-hour shifts — where the employer and employee agree. However, this flexibility requires explicit written agreement in the employment contract. An employment contract that specifies standard hours but allows the employer to demand extended hours without the written flexibility provision creates both a contractual dispute and a statutory violation on overtime calculation. The OSH Code also mandates that any work beyond 8 hours in a day attracts overtime pay at double the ordinary rate.
Clause 4: Leave Entitlement
What it must state:
- Annual earned leave (EL) entitlement — workers can avail annual leave after 180 days of work in a year under the new codes
- Casual leave (CL) entitlement — typically 10 to 12 days per year
- Sick leave (SL) entitlement — typically 10 days per year
- National and festival holidays — mandatory holidays as notified by state government
- Leave carryforward limit and encashment policy
- Leave without pay (LWP) policy and impact on salary
- Maternity leave — 26 weeks of paid leave for women employees (Social Security Code 2020)
- Paternity leave policy, if the employer provides it
Why it matters:
The new Labour Codes lower the threshold for earning annual leave — workers can avail leave after completing 180 days of work in a year, as compared to higher thresholds under the old framework. Leave encashment entitlement at Full and Final Settlement is a statutory right. An employment contract that specifies a leave policy below statutory minimums is void to that extent — the employee retains the statutory right regardless of what the contract says.
Clause 5: Probation Period
What it must state:
- Duration of probation — typically 3 to 6 months, extendable up to maximum 6 months in most states
- Notice period applicable during probation — can be shorter than post-confirmation notice
- Performance review process during probation
- Whether confirmation is automatic or requires a written confirmation letter
- Consequences of not passing probation termination with short notice, no separation pay
Why it matters:
The Noida logistics case at the start of this article turned on exactly this issue. The driver was terminated at 3 months. The employer treated this as a probationary termination. However, because no probation period was written into any document, the Labour Court treated it as a termination of a confirmed employee. In the absence of a written probation clause, an employer cannot invoke shorter notice or lower compensation at separation courts default to treating the worker as confirmed from day one.
Clause 6: Notice Period
What it must state:
- Notice period required from the employee on resignation
- Notice period required from the employer before termination
- Whether notice can be waived in lieu of salary (pay in lieu of notice)
- Any differentiation between notice during probation and notice after confirmation
- Circumstances under which notice is not required — gross misconduct, serious breach of contract
Why it matters:
The IR Code requires employers to give adequate notice before termination. For workers in establishments with 100 or more workers, retrenchment without notice and compensation (equivalent to 15 days’ wages per completed year) is a violation. The Code on Wages 2019 also requires full and final settlement payment within two working days of separation — not the next payroll cycle. An employment contract that does not specify notice terms clearly makes it difficult for the employer to defend any termination decision in a dispute.
Clause 7: Grounds for Termination and Disciplinary Process
What it must state:
- Grounds for termination — misconduct, poor performance, redundancy, violation of company policy
- Definition of misconduct — theft, fraud, insubordination, unauthorised absence, breach of confidentiality
- Disciplinary procedure — warning, show-cause notice, suspension, inquiry, final order
- Right to be heard — principle of natural justice requires the employee to have an opportunity to respond
- Summary termination provisions for cases of serious misconduct
Why it matters:
Under the IR Code, a worker cannot be dismissed, discharged, or retrenched without following the prescribed procedure. An order of dismissal that does not follow the documented disciplinary process in the employment contract — or the Standing Orders where applicable — is voidable. Labour courts have consistently reinstated workers dismissed without proper procedure, regardless of the merit of the misconduct allegation. The written disciplinary process in the employment contract forms the procedural foundation for any lawful termination.
Clause 8: Grievance Redressal Mechanism
What it must state:
- How an employee can raise a grievance — written complaint, verbal, HR portal
- The Grievance Redressal Committee (GRC) — mandatory for establishments with 20 or more workers
- GRC composition — equal representation of employer and workers, proportionate representation of women
- Timeline for GRC resolution — typically 30 to 45 days
- Escalation path if GRC does not resolve the grievance
- POSH committee reference for grievances relating to sexual harassment
Why it matters:
The IR Code makes the Grievance Redressal Committee mandatory in all establishments with 20 or more workers. This is not optional and is not satisfied by simply having an “open door HR policy.” A written grievance mechanism in the employment contract, combined with a functioning GRC, is both a statutory requirement and a practical dispute prevention tool. Workers who have a documented internal escalation path are less likely to go directly to the Labour Commissioner or Labour Court — which is significantly more expensive and time-consuming for the employer.
Clause 9: Social Security Benefits — PF, ESI, and Gratuity
What it must state:
- PF applicability — employee and employer contribution rates (12% each of basic salary)
- ESIC applicability — for employees earning up to Rs 21,000 gross per month (0.75% employee, 3.25% employer)
- Gratuity entitlement — eligible after 5 years of continuous service for permanent employees (15 days’ wages per year)
- For fixed-term employees — gratuity eligible after just 1 year of service on pro-rata basis (see below)
- Health check-up entitlement — mandatory free annual health check-up for employees above 40 years of age under the new Codes
Why it matters:
The Social Security Code 2020 extends social security coverage to all workers, including gig and platform workers, seasonal workers, and workers in the informal sector. The appointment letter must reflect what benefits apply to the specific worker — because an employee who later discovers that PF was not deducted, that ESIC coverage was not provided, or that gratuity was incorrectly calculated has both a civil remedy and a statutory complaint available. Documenting the benefit structure in the employment contract creates clarity from day one.
Clause 10: Full and Final Settlement Terms
What it must state:
- The timeline for Full and Final Settlement payment — mandatory within 2 working days of separation under the Code on Wages 2019
- Components of FNF — pending salary, leave encashment, gratuity (where applicable), reimbursements
- Condition for release of documents — relieving letter, experience letter, PF transfer initiation
- Any amount the employer can withhold — only specific statutory deductions or documented contractual deductions
Why it matters:
The Code on Wages 2019 mandates that full and final wages must be paid within two working days of the employee’s last working day. This is a dramatic change from the earlier practice of settling FNF in the next payroll cycle (which could mean 30 to 45 days). Employers who continue the old practice are now in violation. Employment contracts should reflect this timeline explicitly so both parties are clear on what is expected at separation.
Complete Employment Contract Clause Reference Table
The following table provides a quick reference for HR teams drafting or reviewing employment contracts in India. It covers all mandatory clauses, the law that requires them, and whether the clause is mandatory or recommended.
| Clause | Source Law | Status |
|---|---|---|
| Designation, role classification, and work location | IR Code 2020 | Mandatory |
| Gross wages with 50% basic rule and allowance breakdown | Code on Wages 2019 | Mandatory |
| Working hours, shift structure, and overtime rate | OSH Code 2020 / IR Code 2020 | Mandatory |
| Leave entitlement — EL, CL, SL, maternity leave | OSH Code 2020 / Social Security Code 2020 | Mandatory |
| Probation period, duration, and terms | IR Code 2020 / Standing Orders | Mandatory |
| Notice period — by employee and by employer | IR Code 2020 | Mandatory |
| Grounds for termination and disciplinary process | IR Code 2020 / Standing Orders | Mandatory |
| Grievance redressal mechanism and GRC | IR Code 2020 (20+ workers) | Mandatory |
| PF and ESI contribution details | EPF Act / ESI Act / Social Security Code 2020 | Mandatory |
| Gratuity entitlement and eligibility | Payment of Gratuity Act / Social Security Code 2020 | Mandatory |
| Full and final settlement within 2 working days | Code on Wages 2019 | Mandatory |
| Equal pay for equal work — no gender differentiation | Code on Wages 2019 | Mandatory |
| Annual health check-up (employees 40+ years) | OSH Code 2020 | Mandatory |
| Confidentiality obligations | Indian Contract Act 1872 | Strongly Recommended |
| Intellectual property assignment clause | Copyright Act 1957 | Strongly Recommended |
| Non-solicitation clause (limited scope) | Indian Contract Act 1872 | Recommended with caution |
| Non-compete clause (post-employment) | Indian Contract Act 1872 (Section 27) | Generally Unenforceable |
| Jurisdiction and governing law clause | Indian Contract Act 1872 | Recommended |
Fixed-Term Employment Contracts: What Is Different Under the New Codes
The Industrial Relations Code 2020 introduces formal recognition of fixed-term employment as a distinct employment category. This is one of the most significant changes for employers who use short-term contracts. Understanding the specific rules for fixed-term employees is critical — because several obligations that previously applied only to permanent employees now apply to fixed-term workers as well.
Gratuity After One Year — Not Five
Under the old framework, gratuity required five years of continuous service. Under the IR Code 2020, a fixed-term employee becomes eligible for gratuity on a pro-rata basis after completing just one year of service under the contract. The formula remains the same — 15 days’ wages per year of service — but the five-year minimum no longer applies to fixed-term workers.
This has significant cost implications for employers who use short-term contracts as a way to avoid long-term employee benefits. A worker hired on a 12-month fixed-term contract at Rs 25,000 per month now accrues gratuity of approximately Rs 14,423 at the end of that contract period. Multiply this across a workforce of 50 fixed-term workers, and the unplanned gratuity liability becomes material.
Equal Pay as Permanent Employees
Fixed-term employees doing the same work as permanent employees must receive the same wages and the same allowances. The Code prohibits wage discrimination based purely on the nature of the employment contract. An employer cannot pay a fixed-term data analyst less than a permanent data analyst performing identical work simply because the former is on a contract.
No Automatic Retrenchment Compensation at Contract End
When a fixed-term contract expires at its natural end date, the employer does not need to pay retrenchment compensation — because the termination is by the terms of the contract, not by the employer’s unilateral decision. However, if the employer terminates a fixed-term contract before its natural end — without grounds specified in the contract — the employee is entitled to compensation for the unexpired period.
What a Fixed-Term Employment Contract Must Include
- The start date and end date of the contract — both must be specific
- The nature of work the employee will perform during the contract period
- Wages — which must be equal to permanent employees doing the same work
- Gratuity entitlement — explicitly acknowledging pro-rata gratuity after one year
- Whether the contract is renewable and under what conditions
- Early termination provisions and associated compensation
- All other mandatory clauses applicable to permanent employees — working hours, leave, notice, grievance mechanism
Standing Orders: Which Companies Need Them and What They Must Cover
Standing Orders are a formal, government-certified document that governs the terms and conditions of employment in industrial establishments. They are distinct from individual employment contracts — they set the framework within which individual contracts operate.
Who Must Have Standing Orders Under the IR Code 2020
The IR Code 2020 raises the Standing Orders threshold from 100 workers (under the old Industrial Employment (Standing Orders) Act, 1946) to 300 workers. Establishments with 300 or more workers must prepare, certify, and display Standing Orders. Establishments with fewer than 300 workers are not mandated to certify Standing Orders — but the Central Government may issue Model Standing Orders that these establishments can adopt.
What Standing Orders Must Cover
- Classification of workers — permanent, temporary, probationary, casual, apprentice, fixed-term
- Manner of informing workers about work hours, holidays, paydays, and wage rates
- Attendance and late coming policy
- Conditions of, procedures for, and authority to grant leave
- Requirements relating to entry, exit, search, and safety
- Act and omissions that constitute misconduct
- Disciplinary action — warning, suspension, dismissal
- Termination of employment — notice requirements, certificate of service
- Grievance redressal mechanisms for workers
For establishments below 300 workers, the Model Standing Orders issued by the Central Government serve as the default framework. Employment contracts for workers in these establishments should align with the Model Standing Orders — and where there is a conflict between the employment contract and the Standing Orders, the Standing Orders prevail.
Employment Contract Clauses That Are Legally Void or Unenforceable in India
Several clauses that appear regularly in Indian employment contracts are either entirely unenforceable or substantially limited by Indian law. Employers who rely on these clauses — without understanding their legal limits — are operating with a false sense of protection.
Post-Employment Non-Compete Clauses
Generally Void Under Section 27 of the Indian Contract Act, 1872
Section 27 of the Indian Contract Act declares void any agreement that restrains a person from exercising a lawful profession, trade, or business. Post-employment non-compete clauses — clauses that prevent an employee from joining a competitor or starting a competing business after leaving — are routinely held void by Indian courts. Indian courts distinguish sharply between non-compete restrictions during employment (enforceable) and those after employment (generally void). A clause preventing a software engineer from working in the IT sector for two years after leaving is void and unenforceable in India, regardless of how much consideration the employer paid for the restriction.
Clauses That Reduce Statutory Minimums
Void to the Extent They Contradict Statutory Rights
Any employment contract clause that provides less than the statutory minimum is void to that extent. Examples: a clause specifying leave of 7 days per year when the applicable statute grants 12 days; a clause specifying FNF settlement within 30 days when the Code on Wages 2019 requires 2 working days; a clause specifying overtime at 1.5x when the Factories Act requires 2x; a clause waiving the employee’s right to PF or ESI contributions. The statutory minimum always applies — the employee retains the right regardless of what the employment contract says.
Clauses That Discriminate Based on Gender
Void Under the Code on Wages 2019 and Constitutional Guarantee
The Code on Wages 2019 explicitly prohibits gender discrimination in wages. An employment contract that specifies different wage rates for male and female employees performing the same or similar work is void — and the employer is liable for the wage differential plus penalties. This applies even where the pay difference is structured through allowances rather than the basic salary component.
Confidentiality and Non-Solicitation: What Indian Courts Will Enforce
While post-employment non-compete clauses are generally unenforceable in India, two related restrictions do enjoy meaningful enforceability when drafted correctly.
Confidentiality Clauses
Indian courts regularly enforce confidentiality agreements — both during and after employment. A well-drafted confidentiality clause that:
- Specifically defines what constitutes confidential information — client lists, pricing, product formulations, trade secrets, unpublished financial data
- Distinguishes confidential information from information that is already in the public domain
- Specifies the duration of the confidentiality obligation — typically 2 to 3 years post-employment
- States the remedy for breach — injunction and damages
…has a reasonable prospect of enforcement in Indian courts, particularly when tied to demonstrable trade secrets that the employer can show were disclosed to the employee in the course of employment.
Non-Solicitation Clauses
Non-solicitation clauses — preventing an employee from soliciting the employer’s clients, customers, or other employees after leaving — occupy an intermediate position in Indian law. Courts have enforced narrow, time-limited non-solicitation clauses where:
- The restriction is limited to specific clients with whom the employee had direct dealings
- The duration is reasonable — typically not more than 12 months
- The geographic scope is not unlimited
- The clause is accompanied by genuine consideration — not just the employment itself
Broadly drafted non-solicitation clauses — those that prevent any contact with any former client for three years — are treated by Indian courts similarly to non-compete clauses and are generally not enforced.
Common Appointment Letter Mistakes That Create Labour Disputes
The following mistakes appear consistently in employment contracts and appointment letters that are challenged before Labour Courts and Conciliation Officers across India. Each one is preventable.
- No appointment letter at all — The most common and most damaging. The employer has zero documentation to rely on in any dispute.
- Appointment letter signed only by HR, not by the employee — Courts treat an unsigned appointment letter as a unilateral document, not a binding agreement.
- No defined probation period — As in the Noida case, the absence of a written probation clause converts all terminations within any timeframe into confirmed-employee terminations for legal purposes.
- Salary structure with less than 50 percent basic — Creates undeclared PF and gratuity liability under the Code on Wages 2019.
- Overtime rate specified as 1.5x — Direct violation of the statutory 2x requirement under the Factories Act / OSH Code.
- No grievance mechanism reference — Mandatory for establishments with 20 or more workers under the IR Code 2020.
- FNF timeline specified as “next payroll cycle” — Violates the Code on Wages 2019 two-working-day requirement.
- Old template not updated for Labour Codes — A pre-November 2025 template that does not reflect the new wage definition, new gratuity rules for fixed-term employees, or new leave entitlements creates immediate non-compliance from the date of issue.
- Verbal variation of written contract — Verbal modifications to a written employment contract are extremely difficult to prove. Any change to employment terms must be recorded in writing and signed by both parties.
Frequently Asked Questions About Employment Contracts in India
Is a written appointment letter mandatory for all employees in India in 2026?
Yes. The Industrial Relations Code, 2020 — which came into force on 21 November 2025 — makes written appointment letters mandatory for every worker across all sectors and all establishment sizes. The Union Minister for Labour confirmed this in Parliament in February 2026. There is no minimum headcount or salary threshold. Every worker, including daily wage workers and workers in informal employment, must receive a written appointment letter.
Does an intern or trainee need a written appointment letter?
Interns and trainees engaged under the Apprentices Act, 1961 are governed by that Act’s separate framework — appointment letters under the IR Code do not apply to them. However, trainees who are not formal apprentices under the Apprentices Act — those engaged directly by the employer for a training period before confirmation — should receive an appointment letter that specifies the training period duration, the stipend or wage, the applicable notice, and the confirmation process. Without documentation, a trainee’s engagement can be treated as permanent employment in a dispute.
Can an employment contract specify that disputes go to arbitration rather than Labour Court?
This area of Indian law is unsettled. The Supreme Court of India has held in several cases that the jurisdiction of Labour Courts under the Industrial Disputes Act (now the IR Code) cannot be ousted by a private arbitration clause. Workers can always approach the Labour Court regardless of what the employment contract says about arbitration. Arbitration clauses in employment contracts may be enforceable for specific contractual disputes between senior managerial employees — but for industrial disputes involving wages, terms of service, or wrongful termination, the Labour Court jurisdiction remains paramount.
My company has fewer than 300 workers. Do we need Standing Orders?
No — under the IR Code 2020, the mandatory Standing Orders requirement applies to establishments with 300 or more workers. Establishments below this threshold are not required to certify Standing Orders. However, the Central Government may issue Model Standing Orders that apply to smaller establishments as the default framework. Smaller employers should ensure that their employment contracts address all the matters that Standing Orders would cover — classification of workers, leave, attendance, disciplinary procedures, and grievance mechanisms — even if formal certification is not required.
We are a startup with 10 employees. Do all the new Labour Code obligations apply to us?
Yes — many of them do, and this surprises founders. The mandatory appointment letter obligation applies from day one with any employee. The Code on Wages 2019 — including the 50 percent basic pay rule and the two-working-day FNF settlement requirement — applies regardless of company size. The Grievance Redressal Committee is mandatory at 20 or more workers. PF registration becomes mandatory at 20 or more employees, and ESIC at 10. Startups that have grown quickly in the past year without updating their HR compliance framework are likely non-compliant on several of these obligations without being aware of it.
Are Your Employment Contracts Compliant with India’s New Labour Codes?
The four Labour Codes have been in force since 21 November 2025. If your employment contracts and appointment letters have not been updated since then, they are almost certainly non-compliant — on the salary structure, the gratuity clause for fixed-term employees, the FNF settlement timeline, or the mandatory grievance mechanism. The Noida logistics company’s Rs 1.8 lakh lesson is available to every employer in India who does not act now.
Futurex Management Solutions provides complete HR compliance and labour law services for businesses of all sizes — from appointment letter templates and fixed-term contract drafting to Standing Orders preparation, GRC setup, payroll compliance, and end-to-end statutory compliance management. One team. Complete coverage.
What Futurex Provides for HR and Payroll Compliance
- Employment contract and appointment letter templates — updated for all four Labour Codes
- Fixed-term contract drafting — gratuity, equal pay, and renewal provisions included
- Standing Orders preparation and certification support for 300+ worker establishments
- Grievance Redressal Committee setup and documentation
- Salary structure review — 50 percent basic rule compliance, PF and ESI impact assessment
- PF ECR filing, ESIC challan, TDS on salary — complete payroll statutory compliance
- Full and Final Settlement process — 2-working-day compliance
- Free HR compliance audit — identify every gap in your current employment contracts and payroll setup