One of the most delightful aspects of being an HR is the ability to offer jobs to employees and experience their happiness on obtaining the new position. However, for statutory compliance and transparency, this should be conveyed to the new employee in a formal document while also ensuring that they have a clear understanding of their responsibilities as well as the company culture.
The ‘Offer Letter’ is a formal document that serves all of the purposes mentioned above and hence, it is used by companies all over the world to incorporate a new employee into their organization. Although it depends on various other factors, a well-crafted offer letter can also be the difference between the candidate choosing one company over another.
Hence, let us take a closer at what kind of document is classified as the job offer letter and what is its relevance in employment.
What is an Offer Letter?
Technically speaking, the job offer letter is a formal document provided by the employer to a new employee to ‘offer’ them a new job position at the company, and as such, it contains all the terms and conditions of the position being offered as well as the duties and responsibilities of the same along with the remuneration details for said position.
Most offer letters would also come with a validity period within which the employee needs to confirm the acceptance of the job offer, failing which, the offer is supposed to be null and void. However, even if there is no validity period mentioned on the offer letter, it is assumed that it is valid only until the day of joining mentioned on the offer letter itself. If the employee fails to show up on the joining date and fails to provide a reason for the same, the company considers the offer to be invalid.
The job offer letter can also provide the candidate with basic information regarding the company culture and employment experience. It can also provide an overview of the daily duties that the candidate is expected to perform, which will provide them with a heads-up and prepare them for their daily work.
One needs to understand that the offer letter is not a guarantee of employment for a specific amount of time and some companies might provide the offer letter in the form of a job offer email, however, it has the same importance as a physical offer letter.
What will be the components of a Job Offer Letter?
An offer letter is made of multiple components, some of which are mandated by law while some are provided for the information and convenience of the employee. Some of the common components of job offer letters are:
The job description provides the details of the daily duties, which the new employee is required to perform daily. It might be provided in a single line or provided as a list of bulleted pointers and in some cases, it will also contain the working hours along with the type of employment such as part-time or full-time.
The joining date or the start date needs to be mentioned in a job offer letter to let the employee know when they need to come to the company for their first day of work.
Some companies even provide the address and directions for reaching the office premises along with it to make the process even easier for the candidate to come to the office on the start date.
Reporting Manager Details
As most offices have a hierarchy structure, it is important to mention whom the new employee would be reporting to, as having these details would also make the onboarding process smoother for all concerned parties.
Most of the companies have a pre-defined salary structure and it is best to present it to the employee in a tabular format for easy comprehension. The salary structure is usually attached to the offer letter as an annexure and provides the salary break up including the various taxes and net salary amount.
Bonus and Commissions
The bonus and commissions section might be included either on the body of the offer letter or provided as a separate annexure for the employee’s reference.
It needs to highlight the various bonuses provided by the company as well as provide the details of earning commissions if the job position enjoys the privilege of earning a commission of any kind.
Companies nowadays provide their employees with multiple extra benefits to attract the best talent and hence, these benefits need to be clearly outlined along with the bonuses and commissions’ annexure.
A clear distinction needs to be provided on the annexure to help the candidate distinguish between these two benefits to avoid any confusion.
Leave and Holiday Details
The leave and holiday details are an optional part of the offer letter which can be provided as another addendum, which helps the employee plan their work and personal decisions by including their new company.
What is the importance of having an Offer Letter format template?
Since the offer letter is a formal document mentioning all the relevant details about the newly employed recruit, a company must have a pre-defined job offer letter format. Having such an offer letter format makes the offer letter itself seem uniform with specific tweaks done for specific positions and candidates depending on their profile and employment details.
Similarly, having a job offer letter format comes in handy when you need to send the offer letters to multiple candidates. It saves a huge amount of time and can be easily customized. This helps in speeding up the recruitment process. It will also result in the candidate receiving the offer letter soon, which might be the difference between them choosing your company or another one where they would have applied to.
Having a good job offer letter format also ensures that you need not spend time proofreading the same letter repeatedly for several candidates since you are simply changing the relevant details based on the recipient of the offer letter. One should also consider the fact the having grammatical errors will be the reason you might lose a great candidate whom you have been nurturing for a long time to get them interested in your company.
To summarise below are the main reasons for having an offer letter format:
1. Official document as a format
2. Uniformity due to rescue of same offer letter format
3. Expedites recruitment process
4. Perfect letters due to error-free offer letter format
5. Easy customization with job offer letter sample.
Sample job offer letter template:
Dear [Candidate Name],
We are pleased to offer you the [full-time/part-time] position of [Job Title] at our company, [Company Name]. We feel that your skills and background will be valuable assets to our team and look forward to a fruitful relationship. You will be reporting to [Manager Name], who is in the position of [Manager’s Job Title] at [Company Name].
Your date of joining will be [Date]. As part of this offer of employment, you will be paid on a monthly basis, an annual gross salary of [Annual CTC]. This letter has an enclosed employee handbook that outlines the additional medical and retirement benefits that you will be eligible for.
You will be able to find the other details such as leaves and holidays you will be eligible for, in the handbook and hence, kindly keep it with you for any reference throughout your employment with [Company Name].
If you choose to accept the job offer along with the terms and conditions of the employment provided in the annexure, please reply by signing and replying with a copy of this letter to confirm your acceptance of this offer.
We look forward to welcoming you as an esteemed member of the [Department Name] team!
If you have any questions, please feel free to contact me at any time via phone on [Phone Number].
Kindly note that if you are unable to reach our office on the aforementioned start date for any reason, please share the reason for the same with us beforehand. Failure to do so might result in this offer becoming null and void.
[Your Job Title]