Offer Letter, Appointment Letter or Employment Contract? What Each Does in India and Which One Binds
Offer letter, appointment letter and employment contract are three documents with three different jobs. Which one binds, what each must contain, what happens when a candidate accepts and then declines, and how HR teams execute all three online.
HR teams issue offer letters by the hundred, follow with appointment letters, and sometimes never get around to the employment contract. Candidates and employers both ask the same questions: is an accepted offer binding, can either side back out, and which document governs when they conflict. This guide explains the three documents, the law behind each, and how to run the process online. Position as of October 2026.
The three documents
Offer letter. A proposal of employment on stated terms (role, compensation, start date, conditions such as background checks). Under section 2(a) of the Indian Contract Act, 1872 it is a proposal; the candidate's acceptance (section 2(b)) completes a contract to employ on those terms, subject to any conditions. It is short and binds both sides to the extent of its terms once accepted.
Appointment letter. Issued on or around joining, confirming the appointment and setting out the main terms: designation, reporting, compensation structure, probation, notice, leave, and reference to policies. In many Indian companies the appointment letter is the employment contract.
Employment contract. A fuller agreement adding confidentiality, intellectual property assignment, data handling, non-solicitation, dispute resolution and termination mechanics. Needed for roles with access to confidential information, IP creation or client relationships.
If the three conflict, the later, more specific document usually governs, but say so expressly: "This appointment letter supersedes the offer letter dated [date]."
Is an accepted offer binding?
Yes, as a contract to employ and to join on the stated terms. In practice, remedies for a candidate who declines after accepting, or an employer who withdraws after acceptance, are limited to damages that can be proved, and courts do not order specific performance of a contract of personal service (section 14 of the Specific Relief Act, 1963 excludes contracts dependent on personal qualifications). Draft the offer with conditions (background verification, document submission, no conflicting obligations) and a stated validity period, so withdrawal on a failed condition is contractual rather than a breach.
What each should contain
| Offer letter | Appointment letter / contract |
|---|---|
| Role, location, start date | Everything in the offer, plus: |
| Compensation (CTC with structure) | Probation period and confirmation mechanics |
| Conditions precedent | Notice period both ways; payment in lieu |
| Validity of the offer | Working hours, leave, policies by reference |
| Acceptance method and date | Confidentiality; IP assignment |
| Employee-data clause (DPDP Act s. 7(i) legitimate use; notice) | |
| Non-solicitation; no post-term non-compete (void under Contract Act s. 27) | |
| Termination grounds and process; governing law |
The Labour Codes
The four Labour Codes took effect on 21 November 2025, with rules still being notified. The Industrial Relations Code, 2020 recognises fixed-term employment (section 2(o)) with benefits not less than a permanent worker's and gratuity after one year; where a role genuinely has an end date, issue a fixed-term appointment letter rather than a consultant agreement. The Code on Wages, 2019 standardises the definition of "wages", which affects how CTC is structured. ****
Running the process online
Offer, appointment and employment documents are not excluded by the IT Act's First Schedule and can be executed electronically. A workable flow:
- Offer generated from the HRMS or ATS into the template; sent for e-signature; candidate accepts with OTP eSign or a platform signature; acceptance date recorded.
- Appointment letter or contract generated on joining; signed by the HR signatory (DSC or Aadhaar eSign) and the employee (Aadhaar eSign); audit trail stored.
- Stamp duty: some states charge duty on employment agreements; check the state schedule and stamp before signature where applicable. ****
- Policy acknowledgements as separate platform signatures.
- Register entries: probation end date, confirmation decision, notice period, fixed-term expiry.
Three mistakes
- Issuing an offer with no validity date and no conditions.
- Letting the offer letter be the only document for a senior hire with IP and client exposure.
- Copying a US non-compete into the contract; it is void after the term under section 27.
Where Legatio fits. Legatio generates offer and appointment documents from HR data, runs e-signature for candidate and signatory, stores the audit trail with the employee record, and tracks probation and fixed-term dates. The terms are HR policy and law.
Position stated as of October 2026. General information, not legal advice.