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Free letter template · Word

Employment Contract Renewal Letter

An employment contract renewal letter extends a fixed-term or contract employee's employment for a new term. It deals with employee-specific points such as pay revision, leave carry-over, continuity of service for statutory benefits and the new end date.

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Preview of the letter

[Highlighted] = fill in
[Company Logo][Company Name]

EMPLOYMENT CONTRACT RENEWAL LETTER

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

To,
[Employee Name]
Employee ID: [Employee ID]
[Designation], [Department]
[Work Location]

Subject: Renewal of Your Employment Contract

Dear [Employee Name],

Your [fixed-term / contract] employment as [Designation] under the agreement dated [Original Contract Date] is due to end on [Current End Date]. Based on business requirements and your performance, we are pleased to renew your employment as follows.

  1. Renewed term: From [Renewal Start Date] to [Renewal End Date].
  2. Remuneration: Your monthly gross will be ₹[Amount] (annual CTC ₹[CTC]) with effect from [Renewal Start Date].
  3. Duties: [No change in duties / Revised duties as attached].
  4. Leave: Your unused leave balance of [Leave Balance] days will be carried forward into the renewed term.
  5. Continuity of service: Your service will be treated as continuous for PF, ESI and gratuity purposes as per law.
  6. Expiry: Your employment will end on [Renewal End Date] unless renewed again in writing.
  7. Other terms: All other terms of your original agreement continue to apply.

Please sign the duplicate copy to confirm your acceptance before [Acceptance Deadline].

Yours sincerely,

For [Company Name]
[Authorised Signatory]
[Designation]
Acknowledged and accepted by
[Employee Name]
Signature: ____________
Date: [Date]

Copy to: Personnel File; [Reporting Manager]; Payroll

What this template includes

  • Current and new end dates
  • Pay revision for the renewed term
  • Leave balance carry-over
  • Continuity of service for PF and gratuity
  • Unchanged terms reference
  • Employee acceptance

When to use it

  • A fixed-term employee's term is ending and the project continues
  • Annual renewal of contract employees on payroll
  • Extending a maternity-cover employee
  • Renewing with an increment after review

How to customise this template

  1. 1Enter the renewed term dates
  2. 2Fill new pay or state no change
  3. 3Decide how leave balance is treated
  4. 4Note any change in duties

HR tips

  • Renew before the end date to keep continuity
  • Review whether the role has become permanent in nature
  • Keep parity with permanent staff doing similar work
  • Communicate the decision early to reduce attrition

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

How many times can an employment contract be renewed?+

There is no fixed number in most cases, but repeated renewals for ongoing work may suggest the role is permanent. Review the arrangement periodically.

Does the PF account change on renewal?+

No. The same UAN and PF account continue.

Is leave balance carried forward on renewal?+

It depends on the policy stated in the letter. Carrying forward is fair when service is continuous.