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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.
Or, to keep things more simple and organized, we suggest using an HR software like Eddy to send forms out digitally and gather the necessary signatures without using physical mail. Get a free, custom quote from us today to see how we can make your onboarding processes as easy as possible!
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
- Reporting structure
- 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
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.
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.
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.
Can a Company Take Back Their Offer After Extending an Offer Letter?
In short, yes they can.
“Depending on why you are wanting to rescind an offer, there are several ways to walk through this process. If it is based on information found about the candidate that is a no-go for the company after the offer was extended, then having a rescind email mentioning such is one way of doing this, letting the candidate know that they are no longer able to provide employment due to XYZ, which is in violation or not aligned with your company’s operations.
“If it is based on a background check, then go through the adverse process of requesting more information and then decide to engage with the candidate for employment or not and then follow up with the post-adverse notice. If it is drug test-related, mention it as such. Any reason really, you want to be clear in your messaging and make sure it is due to objective reasons. ALWAYS make sure to list in your offers that the offer of employment is based on contingencies like passing a background check, drug test, reference check, etc. and that you will confirm employment following all pre-hire documentation is acceptable. This will inform the candidate to ensure they do not place their notice into a current employer until they are confirmed with employment from your company.” – Kelly Loudermilk
Now that you’ve created your offer letter, consider using an all-in-one HR software like Eddy to keep all of your documents organized. Request a free, custom quote today to see how we can help save you hours a week on new hires.
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Questions You’ve Asked Us About Offer Letters
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.