An offer letter is a formal document that is sent to a candidate selected for employment by an employer. It sets out the most important terms of the offer (like salary, hours of work and location) as well as the conditions of the offer (e.g. satisfactory references and evidence of qualifications). It also normally includes a deadline for accepting the offer. The offer letter is normally sent to the employee at the same time (or sometimes before) the employment contract is sent to the employee for signature.
When should you use an Offer Letter?
An offer letter confirms the terms and conditions of the offer of employment, including:
Benefits information and eligibility
Conditions of the offer (for example references and evidence of qualifications)
It should also include a deadline for acceptance of the offer.
It is normally sent to the employee at the same time as the employment contract. Alternatively, the employer may wish to include the basic terms of employment in the offer letter and the employment contract itself could be negotiated once the offer has been accepted. If this alternative option is chosen, the offer should be stated to be conditional upon the employee entering into an employment contract which is acceptable to the employer.
Why is an Offer Letter important and why should you use an Offer Letter?
Once an employer has decided on the chosen candidate, it is likely to notify the candidate verbally that they have been successful in the application process. Following this, the key terms of the offer should be confirmed in writing as soon as possible, so that the employee has certainty and clarity as to the terms of the offer, and in order to show the candidate that the employer is committed to their recruitment. This is particularly important in a competitive jobs market, where candidates may be part of a number of recruitment processes simultaneously. It also avoids the potential for misunderstandings and disputes about what the terms of the offer were.
What are the common pitfalls of an Offer Letter?
Not giving an offer letter
Without an offer letter, there will be a lack of certainty and clarity as to the terms of the employment that is being offered. In addition, candidates are likely to take a verbal offer less seriously, which may make a candidate less likely to accept the offer, particularly in a competitive jobs market.
Not having a deadline for accepting the offer
It is important to include a deadline for accepting the offer to focus the candidate’s mind and ensure that offers do not remain on the table for too long. After the deadline has passed, the offer then automatically lapses without the need for the employer to withdraw it.
Not having a written employment contract
The employer should also send the employee a full employment contract that contains the key terms and conditions outlined in the offer letter, and that satisfies legal requirements as to the information to be included in an employment contract.
In the UK, it is a legal requirement that employees are given a written document summarising the main terms of their employment. This is known as the “written statement of particulars of employment” (or sometimes the “section 1 statement”, as it is required under section 1 of the Employment Rights Act 1996). There is some key information that must be included in a written statement of particulars of employment, for example information relating to salary, benefits, place of work, hours of work, leave entitlements, training opportunities, probationary period and notice period, among others. The written statement of particulars of employment must be given to the employee by no later than their first day of work.
Usually, an employer will want to include additional terms beyond what the law says must be in the written statement of particulars of employment, which is why an employment contract is normally used.
PocketLaw has a number of employment contract templates that you can use. These include templates suitable for a junior member of staff (Employment Contract - Simple), templates suitable for more senior staff (Employment Contract - PocketLaw Standard or the Employment Contract - Indefinite term - Senior Employee), and templates for fixed term staff (Employment Contact - Fixed term - Junior/Mid Level).
Inconsistencies between the offer letter and employment contract
It is really important that the offer letter and employment contract are consistent with each other. Ideally, the contract should make it clear that, in the event of any inconsistency, it is the contract terms that will prevail. This avoids the potential for disputes between the employer and employee at a later date as to what the terms and conditions of the employment were.
Losing the signed copy
Without a signed copy of the offer letter, there is no evidence of what the terms of the offer are. Signed letters can quickly and easily be saved on the PocketLaw platform so that they are securely stored.
Access all the templates you need with PocketLaw. Save time and reduce risk by leveraging our extensive library of 130+ templates, which are developed by qualified lawyers.
Ready to get started? Create all your offer letters in minutes. PocketLaw offers a platform with legal documents, guidance and a clever contract management system, as well as access to partner law firms where bespoke advice is needed. All legal you need to grow your business and drive it forward.