How does a job offer letter differ from an employment contract?

Date published: 2021-01-15   — by Will Elton

Generally, it’s quite common for a would-be employer to send a job offer letter. In essence, this is meant to quickly formalise a candidate’s offer in an attempt to tie them in as a prospective employee. In a place like Hong Kong, things move pretty quickly and people tend to job hop and can get snapped up before you’ve even had time to decide. However, it doesn’t remove the need for a full employment contract. Importantly, you’ll still need to remember to do that before any new employee starts. In general, a job offer letter serves as an incentive to keep the prospective employee from accepting a job elsewhere.

What is a job offer letter?

Essentially, an offer letter or a job offer letter is a formal letter that is sent to a prospective employee who you have selected and decided to hire for the position in your organization. It serves as a written confirmation of an offer. Also, it will contain clear terms and conditions of the job for both the employee and the employer. When signed, it indicates an agreement between the employer and the employee that the job has been offered by the employer and accepted by the employee under the outlined terms.

In essence, if you want to get an offer out to a candidate fast but haven’t got sufficient details for the full employment contract, an offer letter is a great way of summarising the offer.

Usually, a job offer letter is followed by a detailed employment agreement that elaborates on the terms and conditions included in the letter.

What should I include in a job offer letter?

  • Job title (position title): the title of the offered position, for e.g.: Finance analyst, Product manager, Back end developer etc.
  • Location: the workplace location from where the employee will work, for e.g.: company address, work from home, etc.
  • Job description: the details of the job or key performance areas of the candidate;
  • Starting date
  • Probationary period (if any)
  • Hours of work: full-time position or part-time,
  • Salary and benefits: base salary for the position offered, allowances and reimbursements (if any), medical insurance (if any), stock options, other employee benefits; pay period (monthly basis, weekly basis etc.), paid time;
  • Leave benefits: annual leave, sick leave, maternity leav, paternity leave etc.
  • Confidentiality and intellectual property: period for which confidential information must not be disclosed, ownership of rights to intellectual property created during employment;
  • Any special conditions of employment: separate non-disclosure agreement to be signed, employment visa to be maintained throughout employment, background check to be allowed, mandatory reference checks;
  • Conditions for termination: notice period, written resignation letter or termination letter to be served;
  • A deadline for them to accept.

For how long does an offer letter remain valid for acceptance?

Usually, a job offer letter has an expiration date. Effectively, this a deadline for the job offer acceptance by the candidate. Generally, if the candidate accepts and signs the offer letter on or before the expiration date, it is valid. So, always be careful to confirm your acceptance of the offer by signing and returning the letter before the deadline.

In some cases, it is specifically mentioned that the accepted and signed offer letter should be returned to the employer within the expiration date. However, in other cases, the date of the signature is set as the deadline. Thus, the time taken for the signed offer letter to reach the employer is excluded/ignored. So be careful to read and confirm your deadlines correctly.

Is a job offer letter legally binding?

Yes, a job offer letter or an offer of employment letter is legally binding once the employee accepts the offered position by signing the job offer letter.

How can I create an offer letter?

You can create an offer letter by using our free standard job offer letter template or any job offer letter sample template you created. Just be sure to include the terms and conditions above.

Can I send an offer via email or phone?

Yes, you can send a job offer via email, using the formal offer letter. And, although you can offer a job via phone, a formal job offer letter cannot be served over a call.

What are the other names for an offer letter?

  • Formal job offer letter
  • Employment offer letter
  • Offer letter
  • Written Job offers
  • Job offer acceptance letter
  • Offer letter with job description
  • Job offer templates
  • Job offer email template
  • Simple job offer letter

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