Basics of an offer letter

#HRGUIDE: BASICS OF AN OFFER LETTER

#HRGuide is an initiative by Applicant Tracking System to guide HRs who are new in the profession of Human Resources and its responsibilities. Today we are covering about the basics of an Offer Letter, why is it important to provide the candidate with a offer letter.

An offer letter is a document that formally confirms the details of an offer of the employment. It is taken as a written proof of contract between the employee and the employer. During the time of interview, if a candidate is selected, it is mandatory for HRs to provide the candidate a document of Offer Letter. Generally the employee has to sign and return a copy of the letter to employer as a formal acceptance of employment. However it is not necessary that it is to be signed immediately.

Some of the basic information that should be mentioned 1. Basic Job Information Offer letter should contain the Title of the position, department to work in and whom the new joinee is supposed to report to. This should also inform the employee, location of the job and when he can join the company. Also, mention if it is full time employment, or a part-time work.

2. Salary How much the employers are paying the employee should be mentioned. A recommended way is to segment the salary into various components like – Basic Salary, HRA, Allowances, Bonus etc. whichever is applicable in your organisation.

3. Bonuses

If there is any amount that is paid as bonus, it should be mentioned. The letter must clearly say dates or approximate time period (monthly, quarterly, half yearly or yearly) distribution of bonus. For more transparency, tell employees the format of bonus – could be cash, added in salary, paid leaves etc. As much possible, tell employees how their bonus will be calculated.

4. Policies HRs are advised to mention all the relevant policies that are applicable with this job in the offer letter provided. This will keep the employee in sync with the company’s working style. It could be leave policy, working days or working hours policy, work etiquettes etc.

General Terms and Conditions that comes with an Offer Letter 1. Contract of Employment If there is any contract between the company and the employee, it should be clearly mentioned. The letter should clearly say the period of probation (if any), notice period (if quitting the company) and any bond period (if applicable) that an employee is expected to serve. Also mention the fines an employee need to fill if not meeting these contract terms.

2. Expiration of Letter Once HRs provide offer letter to the selected candidates, they should also mention the expiry date to the acceptance of the same. A recommended timeline would be to ask candidate to give his acceptance within 30 days. This will make the process fast. If the employee is not willing to accept the offer, the employer can look for another candidate within time.

3. Confidentiality Clause Generally along with the offer letter employee has to sign a letter accepting that he will not share any confidential information of the company to anyone. This might include, but not limited to, hardware knowledge, software knowledge, tools and techniques used by the company, patent and copyrights information etc. Breaching which the employee might be subjected to legal actions.

Providing an offer letter and receiving a signed copy of the same is most crucial for any company. If the procedure is not followed, a candidate might not feel trust in the company and can look to switch company soon. Without this letter, an employer cannot take any action against the leaving employees.