Offer Letter

The job offer letter is your company’s first opportunity to make a great impression on your future team member. At the same time, it is also a document that must be drafted both strategically and compliantly to avoid creating unintended legal obligations. In this article, you will learn not only what to put in your next offer letter, but also how to do it the right way so that your candidate is just as excited to accept your offer as you are to offer it.

What is a Job Offer Letter?

A job offer letter is the first written document from an employer to the candidate indicating they would like to hire that candidate. It contains a summary of the position, the offered salary and other benefits, location, and whatever contingencies must be met before the hire can take place.

The offer letter is usually sent out after either HR or the hiring manager calls the candidate to verbally offer them the job. The letter should be sent out both via email and regular mail so that the candidate can sign it and send it back.

Offer Letter vs Employment Contract

An offer letter is not an employment contract, but it may look similar. The main difference between an offer letter and an employment contract is that an employment contract creates an employment relationship between the parties. If written appropriately, an offer letter does not create an employment relationship.

An offer letter is more like an invitation. If the candidate accepts the invitation and signs the letter, then the employer can get started on drafting the employment contract and taking care of the contingent items in the letter.

An employment contract, on the other hand, is a legally binding agreement between the employer and the employee. The employment contract specifies the rights and responsibilities of both employer and employee in detail. By signing the employment contract, both parties agree to be bound by its terms.

What to Include in an Offer Letter

The offer letter should include:

  • A summary of the position’s responsibilities
  • Benefits and location of the position
  • Contingencies of employment
  • Duration of the offer
  • Disclaimers about the nature of the letter.

1. General Information About the Position

The offer letter should include the following general information about the job:

  • Position title
  • Location
  • Reporting structure
  • Pay
    • Pay rate
    • Salaried or hourly
    • FLSA status
    • Frequency of pay
  • Incentive compensation, if applicable
  • Proposed start date
  • Details about orientation
  • Whether it’s full-time or part-time
  • Which shift you’re offering the candidate

2. Benefits

Offer letters should include information about what benefits the offer recipient will be eligible for, including health and dental insurance, 401(k) plans, life insurance, and other benefits. You can include the basic details of these benefits in the letter itself, or provide the candidate with your company’s benefits package folder.

Companies often require employees to work with the company for a certain amount of time before they become eligible for certain benefits. These and other similar requirements should be included as well.

3. Contingencies

Most companies put contingencies in the offer letter that must be completed before the hire is complete. These contingencies might include background checks, credit checks, or drug tests. In some cases, a company will require that the candidate sign a confidentiality agreement. The company will also typically confirm that the candidate has the education and certifications that they included in their application materials.

The offer letter should state clearly that the work offer is contingent upon the successful completion of any checks or tests required.

4. Duration of the Offer, NOT Duration of Employment

An offer letter should let the candidate know how long the offer of employment stands so that they do not sign and send the letter back too late. This should not be confused with the duration of employment. Generally, an offer letter should never include the duration of employment or any promises of long-term employment, indefinite employment, or job security.

5. Disclaimers

It is very important that the offer letter is drafted carefully so that it is not interpreted as an employment contract (sometimes called an employment agreement).

There are many reasons an employer would like to avoid this. They may plan to send the candidate an actual employment contract, or it may be that the employer’s intention is to hire the candidate as an employee at will. The latter of these considerations is the most common, as at-will employment is typically the favored employment relationship in the United States.

Include a disclaimer informing the candidate that the offer letter does not constitute an employment contract. If applicable, the offer letter should also include that employment will be at-will.

Whether a disclaimer is legally effective depends on the state in which the company is located. Employment contract law is typically regulated by state law.

4 Tips for Writing and Sending the Job Offer Letter

As you start drafting your offer letter, keep these tips in mind:

Do Not Use Language that Implies an Employment Contract

Some state courts have found an offer letter to constitute an employment contract in part because of how specific the terms of the offer letter were. When drafting the offer letter, be sure to use broad language that summarizes the main aspects of the job. Also, avoid making statements about indefinite employment or employment of a specific duration.

Make the Offer Verbally Before Sending the Letter

Receiving an employment offer is a very exciting event for candidates and it is important to be able to share in that excitement. Giving the employment offer over the phone will be more personal than learning of the employment offer via email or a letter, especially if their future manager is the one calling.

Also, remember that receiving the offer letter is not only an exciting moment for the candidate, but also a part of the recruitment process. So, don’t shy away from showing your excitement to have the candidate join your team.

However, be aware that in some states, verbal offers can also be considered implied contracts for employment. Before making the verbal offer, create a call template for the person making the call so the offer remains consistent with the drafted job offer letter.

Have the Letter Reviewed by Your Legal Department

Once you are done drafting the offer letter, have your legal department review it for compliance purposes.

Send the Letter Via Email and Regular Mail

Once you have provided your verbal offer to the candidate, you can send them the written job offer letter. Send the letter both via email and regular mail. This way, the candidate will be informed right away with the email, and they will have two options for signing the letter.

Get Started with a Free Offer Letter Template

Many sites offer free letter templates. Below, we’ve selected a few template resources that may help you draft :

  • Indeed’s Employment Offer Letter Samples: Indeed is a job search website. In this article, they provide three employment offer letter samples, each of which is drafted with a different level of formality.
  • SHRM’s Conditional Job Offer Letter: The Society for Human Resource Management (SHRM) is a professional licensing organization that trains HR professionals. They provide top-line HR resources, including this conditional job offer letter template.
  • The Balance Career’s Offer Letter Sample: The Balance Career is a professional blog focused on career development and Human Resource best practices. In this article, you’ll find one template in both word and text formats.

How to Use an Offer Letter Template Correctly

Offer letter templates vary greatly depending on the position type, industry, and location of the employer. Whichever template you use, keep the following in mind:

  • Templates are generic and need to be customized to fit your needs. Make sure to highlight everything you need to change ahead of time so that you don’t forget it down the road.
  • A template, or parts of the template, may not be compliant in your state. Before using a template, review any applicable state laws, particularly with respect to implied employment contracts.

Questions you’ve asked us about Offer Letter

Is an Offer Letter Legally Binding?
Offer letters should not be legally binding. However, if they’re written in a manner that implies an employment contract, they can become legally binding. To avoid unintentional contracts, be sure to review your state laws about implied contracts for employment.
Can Offer Letters Be Signed Electronically?
Candidates can electronically sign an offer letter. For example, employers sometimes have e-sign software that they would like all their new hires to use to sign the offer letter and any other onboarding paperwork. Provide clear directions for the candidate on how to use the software if you offer this option.
Can the Candidate Still Negotiate After Getting the Offer?
Yes, the candidate can negotiate their salary after receiving a job offer letter. Be prepared to send an updated offer letter if any changes are successfully negotiated.

Natasha K. A. Wiebusch

Natasha is a writer and former labor and employment attorney turned HR professional. Her experience as a litigator and HR trainer inspired her to begin writing about anti-discrimination laws in the workplace. As a writer at Eddy HR, she hopes to provide helpful information to both employees and HR professionals who need help navigating the vast world of human resources. When she’s not writing, you might find her cheering on the Green Bay Packers or hiking in the Northwoods of Wisconsin.

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