Anyone you put on a Bengaluru payroll needs a written employment agreement. That covers the first backend engineer at a Koramangala SaaS company, the operations lead at a Whitefield services firm, and the office manager who joined before anybody thought about paperwork. Two people usually do not. An independent contractor you engage on invoice against a defined deliverable signs a services contract instead. A co founder who has not yet drawn a salary is covered by the founders' documents. For everybody on payroll, the Karnataka layer below is the part a downloaded template leaves out.
Does every Bengaluru hire need one, and who genuinely does not?
No single statute orders an employer to issue a contract. What this state gives you instead is a stack of obligations that only a written document can allocate cleanly. An establishment registered under the Karnataka Shops and Commercial Establishments Act, 1961 also has to keep employment records that a Labour Department Inspector may call for.
So the test is not whether the law forces a document on you. It is what the person could walk out with. A full agreement earns its fee the moment a hire touches your source code, your customer list or your test data.
Something lighter is defensible in three situations:
- A vendor or independent contractor billing against invoices, who should sign a services contract instead, because the two documents allocate risk in opposite directions.
- A genuinely short engagement. Professional tax is not payable for a year where the person is engaged for no more than one hundred and twenty days in it, and a scope letter with a confidentiality undertaking often carries the rest.
- A worker you engage through an aggregator. Karnataka has its own welfare legislation for platform based gig workers, motor transport workers and cine workers, and we track what each requires of an employer or aggregator.
What has to be settled before a Bengaluru draft starts?
Nothing slows a draft down like an unsettled salary structure. We need the designation and reporting line, the gross salary with its breakup, the probation and notice periods on each side, and the date the person actually starts.
Then the state decisions, where a generic template runs out of road.
| Clause | What a Bengaluru employer has to settle before signing |
|---|---|
| Working hours and weekly holiday | The limits that apply to your establishment under the Shops and Commercial Establishments Act, 1961 |
| Holidays | 26 January, 15 August and 2 October, plus seven festival holidays that include 1 May and 1 November |
| Salary deductions | Professional tax of ₹200 a month, and ₹300 for February, on salary of ₹25,000 and above |
| Labour welfare fund | ₹50 from the employee, recoverable only out of December wages |
| Night working | Written willingness on file before a woman employee is rostered on a night shift |
| Intellectual property | Whether the clause assigns work that already exists or only work created on the job |
Settle those six and the drafting is straightforward. Leave them open and you get a document that reads well and matches nothing your payroll does.
How does the drafting actually run once you hand it over?
- You share the role, the salary, the notice period and the start date, on a call or through a short form.
- We check what your establishment is registered as, how many people sit on its register, and which holiday and welfare fund duties already bite.
- A CA or CS drafts the agreement around those answers, so the leave and deduction clauses say what your payroll will actually do.
- Duty is computed under the Karnataka Stamp Act, 1957 and the instrument is stamped before anybody signs it, because stamping after signature is not a cure.
- You read the draft, we make one round of changes, and you receive a ready to sign copy.
None of this needs an office visit, and there is nowhere to file the finished document. It is not lodged with the Labour Department, not uploaded to e-Karmika, and never presented to a sub registrar.
Which Karnataka authority ever asks to see this contract?
Nobody holds the file. That is the honest answer, and it is why the document has to be right before signature: no officer will correct it for you later.
Four people can still ask for it later.
- A Labour Department Inspector, who registers establishments under that 1961 Act and inspects the records an establishment is required to keep.
- The Inspector under the Karnataka Industrial Establishments (National and Festival Holidays) Act, 1963. Every employer sends that officer a statement of the holidays allowed in each calendar year, and displays it at the workplace.
- The Welfare Commissioner of the Karnataka Labour Welfare Board, who receives the annual statement in Form D of the contributions paid for the year.
- A court at Bengaluru, if the relationship ends badly. An instrument that is not duly stamped is not received in evidence or acted upon, and it is let in only on payment of the duty with a penalty running to ten times the shortfall.
Employment disputes here are heard by the courts at Bengaluru, and appeals sit with the Karnataka High Court, whose principal seat is also here. A governing law and Bengaluru jurisdiction clause stops venue becoming the first thing anyone argues.
What does it cost, and when does the document come up again?
Our fee is ₹1,999 and the draft reaches you in 1 to 2 days. Stamp duty sits on top of that and is paid to the state, not to us.
An employment contract is charged as an agreement under Article 5 of the Karnataka Stamp Act, 1957. The residuary clause, Article 5(j), has carried ₹500 since 3 February 2024, while Article 5(b) charges ₹50 where the agreement does not relate to a monetary transaction. We settle which clause your document falls in before stamping, because an instrument answering several descriptions is charged at the highest of them. The duty is payable by the executant.
The intellectual property clause deserves its own look. An assignment or transfer of intellectual property rights is charged at one rupee for every one thousand rupees of consideration, with a minimum of ₹200, and that duty falls on the assignee. A clause assigning work that already exists for stated consideration is not the same instrument as one vesting future work created on the job.
Stamp duty in Karnataka is paid electronically through the Department of Stamps and Registration's authorised collection centres, and e-stamping certificates are also issued through the national e-stamping system; we use the right channel for your instrument. Karnataka finally notified rules on 7 August 2025 for a fully digital e-stamp whose repository copy is the original, and we stamp your instrument by the method the department is currently accepting.
The document comes back sooner than employers expect. A salary revision that takes a monthly figure to ₹25,000 and above changes the deduction clause. A promotion changes the notice period. And the state rates move: the payroll deduction changed on 1 April 2025, the welfare fund rate rose in January 2025, and that fund's coverage line came down to ten or more persons on 7 January 2026.
Who in Bengaluru is signing these right now?
- A SaaS founder in Koramangala raising a seed round, whose investors want every engineer on a signed agreement with a clean intellectual property assignment before money moves.
- An aerospace components and testing venture in Yelahanka, where drawings and test data sit with technicians and the confidentiality clause matters more than the notice period does.
- An IT services team in Whitefield hiring in batches, which wants one master agreement with role specific schedules instead of fourteen unrelated drafts.
- A studio in HSR Layout that ran on offer letters for three years and is now tidying up before a buyer's diligence.
What does LegalX India do differently on an employment contract?
We draft the contract, compute the duty and hand you a stamped copy ready for signature, with a CA or CS on the file. What you are paying for is the state layer. That means a holiday list matching the 1963 Act, a deduction clause on the rate in force this year, and a jurisdiction clause naming Bengaluru rather than a city nobody in the room lives in.
For the national picture, read the full employment agreement process nationwide. This page carries what changes because your office is in Bengaluru.
Talk to a CA today and we will tell you, before you pay anything, whether this hire needs a full agreement.