I have query relate to Appointment letters. Do we do them on Stamp Paper or on the letter head is enough? If we choose to do them on Letter Head, in case of any dispute do we need to pay Stamp penalty since we did the appointment letter on letter head? How will the rules differ for appointment letter for Director / CEO / VP level and other employees?

Dear Neha,
For Executive or staff upto GM level, Appointment letter is enough to be printed on Letter Head but with company Stamp, Authorized Signature and also it should be accepted by the Employee. these documents are enough to show if their is any dispute between company and Employee.
But in the Case of Management and other staff above GM level, Appointment letter is printed on Stamp paper.

From India, Gurgaon
Hi Sanchi,
Thanks for the reply. So this means in case of dispute, court or state gov doesnt penalize for stamp duty? Why the management levels on stamp paper? Afterall even the junior positions or GM positions can get into disputes or challenged?

There is absolutely no need to put appointment letters on stamp paper.
All appointment letters for all level of employees are required to be done on company letterhead, signed by the authorised managers (mostly by HR head).
Schedule 1 of the indian stamp act gives the list of documents that need to be on stamp paper. Appointment for job is not in it. The only once close is appointment of apprentices. In no other case is there a need for paying stamp duty for appointment letters.
Stamp duty is mostly for commercial transactions relating to property or agreements between two independent parties in which public at large are interested (partnership deed, sale of property, company formation) or a money deal (loan, advance, promissory notes)

From India, Mumbai
Hi Saswata,
Thanks for your reply, I think There is a term in stamp act called "all other agreements".. So though employment agreement is not specifically mentioned, it will get covered under this wider term of "all other agreements"
I have been checking this with some people and getting mixed ciews...

As Mr.Saswata said there is NO NEED to issue the Apptt.letters on stamp paper to an employee. Some one may have doubt why GM level should have this ? There is NO NEED. But there are some appointments at the Board Levels, who are not considered as Employees but they are on a "Tenure" on contract. Some times an agreement is signed between the Board Level Directors and the Co. where their terms & conditions are listed. In such cases stamp paper agreement is signed considering it as business Contract but not as an employment. However there is no such rule to do so under the Stamps Act. These Directors in many instances are empowered to do/exercise certain duly delegated to them by the competent authorities by Deed known as "Appointment in execution of power" which has to be on a stamp paper of appropriate value. Like wise "Apprenticeship Deed" requires Stamp Duty (Rs.50/-).or Bond and so on.
From India, Bangalore
Thanks .. It does make sense, but I recently got in touch with a lawyer and got to know that under stamp act there is a section " all other agreements" under which the appointment letter would fall. He said that ideally the appointment letters should be done on stamp paper, and if not then at the time of dispute the party who has challenged the appointment letter will need to pay 10times of the original stamp value.
Hence we discovered that companies usually take it as instead of doing appointment letters on stamp paper they fo on letter head.. Which is too a valid document and take the risk of .5% or 1% cases that challenge the association and pay the penalty at that time.

"at the time of dispute the party who has challenged the appointment letter will need to pay 10times of the original stamp value."
Neither employer challenges the appointment letter (as it is issued by him) nor employee challenges the same (as it is accepted by him while signing). Moreover, when on the basis of appointment letter, employee joins the organisation, the appointment letter becomes final agreement. Thus, I do not find any reason to challenge the 'appointment letter.' If employee finds any condition against law of land, he would prefer not to join than to challenge.
Disputes are always for violation of terms and conditions contained in the appointment letter or implementation of applicable law of the land.
Have a nice day!
V K Gupta

From India, Panipat
An appointment letter is not a contract or agreement in the sense considered in the stamp act.
If you want to delve deeper, you need to go through something called general clauses act. What constitutes an agreement is defined in it.
You can safely go on with issuing appointment letters on letterhead.

From India, Mumbai
Your lawyer is not in sync with the actual requirement.
As other members have stated, only in case of someone who is not an employee, but working on a tenure, contract or covenant needs to have an agreement.
Also take a look at the standing orders for your state. It will also have some points on how appointment letter (referred to their as appointment order) should be issued. If it's stated there, then that procedure is sacrosanct as it is specifically related to employment and your don't have to worry about "other agreement"

From India, Mumbai

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