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Free letter template · Word

Contract Employment Letter

A contract employment letter appoints a person on a contractual basis for a defined tenure, usually six months to two years, on the company's own payroll. It is common in IT services, public-sector projects and NGOs where funding or client demand is tied to a contract period.

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[Company Logo][Company Name]

CONTRACT EMPLOYMENT LETTER

Ref. No.:
[Reference Number]
Date:
[Date]

To,
[Candidate Name]
[Candidate Address]
[City] – [PIN Code]

Subject: Appointment on Contract Basis – [Designation]

Dear [Candidate Name],

We are pleased to engage you on a contract basis as [Designation] for the [Project Name] at [Company Name], on the following terms.

  1. Tenure: [Contract Period] months, from [Start Date] to [End Date].
  2. Remuneration: Consolidated monthly remuneration of ₹[Amount], subject to PF, ESI, professional tax and TDS as applicable.
  3. Scope: You will be responsible for [Key Deliverables] and will report to [Reporting Manager].
  4. Place of work: [Work Location], including client sites when required.
  5. Leave: [Leave Days] days of leave for the contract period, as per the contract staff policy.
  6. Renewal: Renewal, if any, depends on project requirement and your performance and will be confirmed in writing before [Renewal Review Date].
  7. Early termination: Either party may end this contract with [Notice Period] written notice or pay in lieu.
  8. Confidentiality: Project and client information must not be disclosed during or after the contract.
  9. Status: The contract ends on the end date and does not by itself create a right to permanent employment.

Please sign and return the duplicate copy along with your joining documents.

Yours sincerely,

For [Company Name]
[Authorised Signatory]
[Designation]
Accepted
[Candidate Name]
Signature: ____________
Date: [Date]

What this template includes

  • Contract tenure with dates
  • Consolidated monthly remuneration
  • Deliverables or project scope
  • Statutory PF and ESI as applicable
  • Renewal by mutual consent based on performance and project need
  • Early-exit notice for both sides

When to use it

  • Client projects staffed for a fixed contract period
  • Government or CSR-funded projects with a sanctioned tenure
  • Specialist roles hired before a permanent budget is approved
  • Re-hiring retired staff on contract

How to customise this template

  1. 1Mention the project or client name if confidentiality permits
  2. 2Choose between consolidated pay and a CTC breakup
  3. 3Set the renewal review date before expiry
  4. 4Add leave entitlement per contract policy

HR tips

  • Make sure contract staff doing similar work get comparable pay and benefits
  • Avoid labelling vendor-supplied workers as your contract employees; that needs a different contract
  • Diary the renewal date
  • Keep performance notes for renewal decisions

This template is a starting point only. Review it against applicable labour laws (including the Labour Codes in force from 21 November 2025 and the state rules being notified), your Shops & Establishments registration, standing orders and company policies, and take advice from a legal adviser where needed.

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Frequently asked questions

Is contract employment the same as contract labour?+

No. A contract employee is on your own payroll for a fixed period. Contract labour is supplied by a contractor and governed by separate rules.

Can a contract employee be made permanent?+

Yes. The company can issue a temporary-to-permanent or appointment letter when a permanent post is available.

Do contract employees get leave?+

Yes, leave should be provided as per the contract, company policy and applicable state rules.