Offer letter

What is an offer letter?

An offer letter is the formal offer of a job to your selected candidate. It usually stands separate from other documents used when appointing a new employee, but depending on the structure of your recruitment process, it could potentially be sent in conjunction with others.

What should be included in an offer letter?

While an offer letter does not constitute an entire agreement, like an Employment Contract, an accepted job offer is legally binding. With this in mind, your offer letter should include many details that will eventually make their way into your new hire’s contract. Using Contractbook templates, you can even import the same data from your offer letters into your Employment Contracts with the minimum of fuss!

Ensure your offer letters include the following:

• Employee details. What is their job title and proposed start date? You may also include information about their probationary period, if applicable, and the date this ends.
• Required documents and terms. List any conditions related to the job offer, such as “receipt of satisfactory references” or any documentation you need the candidate to provide.
• Working schedule. Detail the hours of work and whether there will be a specific schedule.
• Salary. Detail the new employee's salary, payroll pattern, and when they will first be paid about their start date.
• Bonus details. If your business offers a bonus or another incentive scheme, detail how this can be achieved and any specific conditions around the payment.
• Employee benefits. Confirm any details of any additional benefits the employee will gain with their new role. For example, holiday/vacation entitlement will be standard, but you may offer various benefits as part of your more comprehensive employment package, such as private healthcare or a company car. You should outline these in detail, including when they will commence.
• Confidentiality agreements. You can include confidentiality clauses in your offer letter. However, you should get the new employee to sign a Non-Disclosure Agreement upon commencing employment.
• Expiry details and next steps. Outline the date you would like to receive a response to the offer letter. This should be a formality if the candidate has already verbally accepted the job offer. Finally, detail any next steps, such as documentation you will send upon receipt of an accepted offer or dates when they need to attend training.

When should I use an offer letter?

You should send an offer letter after speaking to the successful candidate and verbally offering them the position. If your recruitment process is robust, you will already have provided the candidate with everything they need to know about your company and their expectations around salary and other benefits.

However, depending on the nature and seniority of the role, your offer letter might act as a starting point for negotiations around their employment package. If this rings true for your company, send your offer letter as soon as possible so you can iron out any issues and confirm the appointment.

If you have already agreed to all the terms of employment, then you might send your offer letter with accompanying documents like their Employment Contract.

Why use an offer letter?

In most jurisdictions, sending an Offer Letter is not legally required. However, doing so is good practice. It can attract candidates to your business and give them the confidence to trigger their notice period with their current employer.

From your perspective, receiving a signed offer letter means you can close your recruitment process and start other processes relating to the appointment, such as acquiring references.

While a signed offer letter is usually not a legally binding agreement for employment on either side, it is a gesture of good faith and confidence that you will proceed with the appointment.

Where and how to use an offer letter

Get into the habit of using offer letters as part of your recruitment process. Doing so will continue to build rapport and goodwill with the successful candidate and give them further confidence in their decision to join your company.

Use Contractbook’s offer letter template to ensure your offer letters include all the details a candidate would expect and need to receive. If applicable, remember to include any essential accompanying documents like their Employment Contract.

The contents of an offer letter

Offer letters can vary depending on the nature of the job or industry and the purpose for which it is written. However, there are basic components that you should include in your letter, no matter what type or purpose it is for. The following are the essential contents of an offer letter:

1. Job description. The first part of the letter should describe the job being offered. More than a title is required especially if you have a unique one or the job requires additional tasks. It is always best to indicate all the activities required from the position and its limits. 
2. Salary and compensation. No offer letter does not state the amount of compensation for the job, as it is the primary purpose of a job offer. The letter should also include the frequency and payment method, such as by check or direct deposit. If your company offers bonuses or stock options, it should also be stated clearly and in full in the offer letter. 
3. Benefits. In addition to the salary and compensation, the offer letter should also state benefits provided and covered by the company, such as dental, health, and other types of insurance. Although these benefits and other information will be discussed in further detail later, they will help entice potential Employees to accept the offer. 
4. Dates and times. A response is necessary for an offer letter. If you want the letter signed off and returned immediately, you should state it in your letter. It should also explicitly state the start date of employment, the duration of the daily operation, the length of the probationary period, and expectations concerning work hours per week. 
5. Other relevant documents. Some companies require new employees to sign other documents, such as non-disclosure or non-compete agreements. These documents are usually part of the contract, which is signed after the job is accepted, but you can attach them to the offer.