Read Your Offer Letter: The Clauses That Matter

The email arrives: "Congratulations! Please find attached your offer letter. Kindly accept within 48 hours." After months of searching, the temptation is to scroll to the CTC figure, feel relief and click accept. Most students do exactly that.

But an offer letter is a contract. Buried in its middle pages, or in an annexure, there may be a clause saying you must repay your joining bonus if you leave within a year, a training agreement with a penalty for leaving early, a 90-day notice period, or a rule that the company owns things you build in your own time. None of these is necessarily unfair. All of them are things you should know before signing, not after.

• The eight areas of an offer letter that matter most, in plain words.
• What service agreements and bonds usually involve in India, and how to think about them.
• How to have an AI assistant explain a redacted offer letter safely.
• How to ask HR for clarification, and what to keep.

In India, some employers send an offer letter first (role, compensation, joining date, conditions) and an appointment letter or employment contract on or after joining, with the detailed terms. Others put everything in one document with annexures. Ask HR whether there are further documents (an appointment letter, a service agreement, policies you must accept) and, if possible, read them before you resign from anything or turn down other offers.

The letter should show a breakup: fixed salary components (basic, allowances), employer contributions (provident fund, gratuity), variable pay, bonuses and benefits. The total is usually called CTC (cost to company). What you receive each month is very different from CTC divided by twelve. Article 39 works through the maths.

Check: the basic salary, which affects provident fund and gratuity; which parts are fixed and which are variable; which parts are not paid in cash (insurance, employer contributions, gratuity).

A joining or sign-on bonus is a one-time payment. Many letters require you to repay it, fully or in proportion, if you leave within a period, often 6 to 24 months.

Look for: "joining bonus", "sign-on bonus", "recovery", "repay", "clawback", "pro-rata". Note the amount, the period and whether repayment is full or proportional.

Some employers, especially some large services companies and employers that train freshers for months, ask freshers to sign a service agreement: you agree to stay for a period, or to pay an amount if you leave earlier. Sometimes it is linked to training costs.

Look for: "service agreement", "bond", "training cost", "liquidated damages", "minimum service period".

How to think about it:

• Read the exact terms: the period, the amount, whether the amount reduces over time, what triggers it (resigning, termination for misconduct) and whether it applies during training.
• Understand the general legal position, as reported by legal commentators. Under the Indian Contract Act, agreements in restraint of trade are generally void (section 27), but restrictions that apply during employment are treated differently from those after it. Where a contract names a sum payable on breach, courts award reasonable compensation up to that sum (section 74). Courts have upheld bonds that are reasonable, for example tied to genuine training costs and proportionate to pay; in a 2025 case involving a bank, the Supreme Court upheld a three-year service bond with a ₹2 lakh payment as reasonable. Courts have also reduced amounts that looked like penalties. So do not assume a bond is unenforceable: treat the amount as money you may really have to pay.
• Never hand over original certificates as a condition of employment if you can avoid it. Some employers have asked to keep original documents; this is widely criticised, and you should ask whether copies and verification will do.
• Decide with the bond in mind. If you are likely to leave within the period (for higher studies, a better offer you are expecting), the bond matters more.

The time you must give before leaving, and the time the employer must give you. Common in India: 30 to 90 days, sometimes shorter during probation.

Look for: the period during and after probation; whether you can "buy out" the notice period by paying salary in lieu; whether leave can be adjusted against it. A long notice period affects your mobility later: many companies hiring you next will want you sooner.

A first period, often three to six months, after which you are "confirmed". During probation, notice periods are often shorter on both sides and some benefits may start later.

Look for: the length; what confirmation depends on; whether it can be extended; what changes after confirmation.

Variable pay depends on your performance, the company's performance or both, and may be paid quarterly or yearly.

Look for: what percentage of CTC it is; how it is decided; whether you must be employed on the payout date to receive it (if you join mid-year or leave before payout, you may get nothing); whether the first year is prorated.

Some startups and product companies grant ESOPs (employee stock options, the right to buy shares at a set price) or RSUs (restricted stock units, shares given to you over time).

Look for: the number granted; the vesting schedule (commonly over several years, often with a one-year "cliff" before anything vests); for options, the exercise price and how long you have to exercise after leaving; whether the company is listed (shares can be sold) or private (shares may not be sellable until a sale or listing). Article 39 covers how to value them cautiously, and tax on them.

• Intellectual property assignment: work you create in your job belongs to the employer, which is normal. Check whether the wording also covers things you create in your own time with your own equipment. If you have side projects or open-source work, ask how they are treated, and list existing projects in writing if the company allows.
• Moonlighting: many contracts restrict paid work for others while employed.
• Confidentiality: you must keep company information private, during and after employment. Normal and reasonable.
• Non-compete after leaving: a clause saying you cannot join a competitor for some period after you leave. Legal commentators generally note that post-employment non-competes are hard to enforce in India because of section 27 of the Contract Act, while restrictions during employment and on soliciting clients or employees are treated differently. Note the clause and ask about it; do not assume it is meaningless.

• Joining date and location, and whether the company can transfer you.
• Conditions of the offer: background verification (article 41), submission of documents, final degree results, medical checks.
• Acceptance deadline and how to accept.
• Working hours, shifts and work-from-office policy, if stated.

An assistant can read a long letter quickly and explain clauses in plain words. Two rules:

1. Redact first. Remove your name, address, phone, PAN, Aadhaar, employee or candidate ID and signature. Many offer letters also say the terms are confidential; summarising the clause structure for your own understanding is different from sharing the document, but keep it to what you need.
2. Treat the output as an explanation, not advice. Assistants can misstate laws or miss a clause. Check every point against the letter itself.

Below is the text of a job offer from India, with my personal details removed.I'm a fresher with no legal background. This is not a request for legal advice;explain in plain words.1. Summarise each clause in one or two sentences, with the clause number.2. List every financial obligation I take on (repayments, penalties, bonds),   with amounts, periods and triggers, quoting the text.3. List anything that restricts me during or after employment (notice, IP,   moonlighting, non-compete, non-solicitation), quoting the text.4. List anything unclear or that I should ask HR about.5. List anything that is commonly negotiable for freshers.Say "not stated" when something is missing. Do not guess at Indian law; if apoint needs a lawyer, say so.[paste redacted text]

Ask in writing, politely, before you accept:

Hi [Name], thank you for the offer for [role]. I'm very glad to receive it.Before I accept, could you help me understand a few points?1. Clause [x]: is the joining bonus recovered in full or pro-rata if I leave   within 12 months?2. Is there a separate service agreement or appointment letter I'll be asked to sign?   If so, could I see it before accepting?3. Clause [y]: does the intellectual property clause cover personal projects done   outside work hours on my own equipment?4. Is the variable pay prorated for the first year, and when is it paid?Thank you, [Name]

Most HR teams answer such questions routinely. Clear, written answers are worth keeping. A refusal to answer reasonable questions, or pressure to accept within hours without seeing the full terms, is itself information.

Save the offer letter, every annexure, the emails clarifying terms, and your acceptance, in a folder you will not lose. You may need them for background verification, tax, a dispute or simply to check what was promised a year later.

Sana receives an offer from a large company: ₹6.5 lakh CTC, joining in July, accept within three days. Reading the whole document, she finds:

• a training period of about three months, and a service agreement annexure: two years' minimum service, or ₹1 lakh if she leaves before, reducing by half after the first year;
• a 90-day notice period after confirmation, 30 days during probation;
• variable pay of 8 per cent of CTC, paid yearly, only to employees on the rolls on the payout date;
• an intellectual property clause covering "all inventions conceived during employment".

She asks HR two questions in writing: whether the service amount is pro-rated monthly or only halved after a year, and whether her open-source projects are affected by the IP clause. HR confirms the halving rule and says personal projects outside work, not using company resources, are not covered, adding a line to her confirmation email. She has no plans to leave within two years, decides the terms are acceptable, and accepts with full knowledge of them.

• Reading only the CTC figure.
• Accepting before seeing annexures or the service agreement.
• Assuming a bond can be ignored, or panicking about it without reading the terms.
• Missing the variable-pay conditions (employed on the payout date).
• Pasting an unredacted letter into an AI tool.
• Treating an AI summary as legal advice.
• Clarifying only by phone, with nothing in writing.

Hi [Name], thank you again for the offer for [role]; I'm keen to join.Before accepting, could you clarify three points?1. Is the 60-day notice period the same during probation, and is notice buyout possible?2. Could you share the ESOP policy referred to in the offer, including the vesting   schedule, exercise price and the time allowed to exercise after leaving?3. Could you explain how the 12-month post-employment non-compete clause is applied   in practice, for example which companies count as competitors?Thank you, [Name]

• Next: Fresher Offer Maths: CTC, In-Hand Pay, Variable Pay and ESOPs works out what the offer is actually worth.
• For notice periods in more depth, see Serving a 90-Day Notice Period: How to Handle It Without Burning Bridges.
• For a line-by-line salary breakup, see CTC vs In-Hand Salary: Why Your ₹12 LPA Offer Doesn't Pay ₹1 Lakh a Month.