Appointment letter format for India, ready for the new Labour Codes
Last updated: 20 April 2026
Under the Code on Wages and the wider Labour Codes effective 21 November 2025, every Indian employer must issue an appointment letter to every employee. The salary structure inside it has to respect the 50 percent wage rule. This page covers what to include, where SMEs slip, and how to generate one in minutes with Offrd.
1. Why appointment letters are now mandatory
Section 6 of the Code on Wages, 2019, requires every employer to issue an appointment letter to every employee. The Code on Social Security and the Industrial Relations Code reinforce this by tying contributions, gratuity, and termination protections to a written employment record.
From 21 November 2025, the practical reality for an SME is that an inspection, a PF audit, or a wrongful termination claim will all start with one question: where is the appointment letter?
2. What to include, section by section
An appointment letter that holds up under the new codes covers the following.
- Identification. Employer name, employee name, and date of issue.
- Job title and role description. Clear responsibilities, reporting line, and the position offered.
- Employment type. Permanent, fixed term, probation, trainee, contract, or part time.
- Start date and work location. Joining date, primary location, and whether remote or field work applies.
- Salary structure. Basic, allowances, variable pay, and other components, written so wages form at least 50 percent of CTC.
- Working hours and weekly off. Daily hours, weekly off, overtime treatment.
- Leave and holidays. Annual leave, sick leave, earned leave, plus any festival or national holiday list.
- Benefits and social security. PF, ESI, insurance, with the same wage base used in salary structure.
- Probation and confirmation. Probation period, evaluation process, and what happens at confirmation.
- Notice period and exit. Days, buyout formula if applicable, full and final settlement timing.
- Confidentiality and IP. What stays with the company, what the employee may not disclose.
- Code of conduct and policy reference. Pointer to the company handbook or HR policy, with the version in force at signing.
- Acceptance. Signature lines for both sides, with date.
3. Salary structure and the 50 percent rule
The wage code says at least 50 percent of CTC must be treated as wages. Wages here means basic plus DA plus retaining allowance, but excludes HRA, conveyance, statutory bonus and overtime. The 50 percent test applies to the wage component used for PF, gratuity, and bonus.
Wages must be at least ₹3,00,000 per year, or ₹25,000 per month. PF on this base, not on a slim basic figure. Gratuity calculation also uses this base.
If your current letters push pay into HRA and other allowances to keep PF low, the law will treat the missing portion as wages anyway. The PF, gratuity and bonus owed will be higher than a slim basic figure suggests.
4. Sample appointment letter outline
A workable structure for an Indian SME, in the order most candidates expect to read it.
| Section | What goes here |
|---|---|
| Header | Company logo, registered address, GSTIN, date |
| Salutation | Candidate name, address |
| Subject | Appointment as [Designation] at [Company] |
| Position | Designation, department, reporting manager, location |
| Joining date | Confirmed date of joining; latest acceptable date |
| Salary annexure | Basic, HRA, special allowance, employer PF, gratuity, total CTC; monthly and annual columns |
| Probation | Period (commonly 6 months), confirmation process |
| Working hours | Days, hours, weekly off, overtime treatment |
| Leave | Casual, sick, earned, plus holiday list reference |
| Notice period | Days during probation and after confirmation; buyout formula if applicable |
| Confidentiality and IP | What is protected, what is owned by the company |
| Code of conduct | Reference to current HR policy version |
| Acceptance | Signature, date, witness if used |
5. Common mistakes Indian SMEs make
Salary structure that fails the 50 percent test
Basic at 30 percent, HRA at 50 percent, allowances at 20 percent. The wage code treats the missing portion as wages anyway. PF and gratuity catch up later, with damages.
No appointment letter, only a verbal offer
Section 6 of the wage code makes this an offence in itself. Also makes any later dispute harder to defend.
Notice period in days but no buyout formula
When the buyout fight starts, the absence of a formula is the employer's problem, not the employee's. Spell it out.
Different versions of the letter for different candidates
Inconsistent terms across hires invite discrimination claims and make policy enforcement weak. Use one template and edit only the fields that change with the role.
Confidentiality and IP clause copied from the internet
Most boilerplate clauses are unenforceable in India. Keep them short, specific, and reasonable in scope.
6. Generate one in minutes with Offrd
Offrd handles the appointment letter as part of a wider HR document flow. Set up your company once, build a salary structure that respects the wage definition, and issue letters with clean PF and ESI fields, probation terms, and notice period clauses.
- Indian salary structure with basic, HRA, allowances, variable pay, and statutory components in one place.
- Templated clauses for probation, notice period, confidentiality, and code of conduct.
- Same record carries through to payslips, increment letters, and exit letters.
- For a deeper view of the underlying contribution rules, see our ESI and PF compliance guide.
7. Frequently asked questions
Is an appointment letter mandatory in India?
Yes. Section 6 of the Code on Wages and the wider Labour Codes from 21 November 2025 require every employer to issue one to every employee.
What is the difference between an offer letter and an appointment letter?
The offer letter goes out before joining and sets out terms. The appointment letter is issued on or after joining and is the formal employment record. Many Indian SMEs combine the two; the codes treat the appointment letter as binding.
Does the 50 percent wage rule apply to interns and trainees?
Apprentices under the Apprentices Act sit outside the wage code. Trainees and interns engaged outside that Act fall under the wage definition, with stipend treated as wages.
Can I revise the salary structure later?
Yes, through an increment letter or revised appointment letter. The wage definition still has to hold each time.
Is this page legal advice?
No. This is a practical guide for founders and HR managers. Always check with a labour lawyer for decisions specific to your industry, state, or company history.