An offer letter is a document given to a prospective employee after he/she successfully pass an organization's interview or selection process. The offer letter informs the individual of the terms and conditions of employment at the organization. Despite the fact that the offer itself will determine whether the individual accepts the job or not, a good offer letter ensures that there are no ambiguity or misconceptions. The offer letter protects the individual and the organization from liability as it clearly states what each party's duties and responsibilities are.
The job title/role
The offer letter should state the designation of the new employee within the organization and provide a brief summary of the position. Also include reporting lines such as the name and designation of the new employee's supervisor or reporting manager.
Start/resumption date
The date the new employee is expected to start work or when the offer takes effect is critical information in the offer letter.
Place of work
Initial place of posting should be clearly mentioned. If it has been agreed to work in a wide geographical area, for example other offices, locations within the country or even abroad, it should be clearly and specifically defined. If there is a possibility of Work from home and something have been discussed, then the contract should reflect this.
Salary/ Compensation
Make sure the employment contract reflects what was in the offer letter. There should be provision for payment of other benefits that have been agreed, such as an enhanced pension, car, private health cover, equity or share options, bonuses and commission payments. Clarity on whether the bonus is guaranteed or discretionary. If bonus is based on performance, there should be set targets and an understanding of who decides whether the objectives have been met.
Notice Period
Make sure notice period is not unduly long or short. Generally, a notice period of one to three months is usual. A notice period that is too long could hamper an employee to take up a new job and too short a period may not give a company to get enough stability.
Originally published 14 October 2019
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
