Offer Letters: 7 Essential Elements
When you hired your last employee, it’s likely that you followed up your interview with an informal verbal offer, and then you or someone from your HR team drafted the official written offer of employment. Even though the candidate may have seemed enthusiastic to accept your verbal offer, it’s their written signature on the formal offer that seals the deal. With that, you can celebrate another successful hire and bring your new team member on board.
Sometimes when you want to make a new hire, time is of the essence – particularly if the candidate is fielding offers from other employers. To make the offer process more efficient, you can create an offer letter template that can be quickly customized for almost any position. An effective template should have seven essential elements:
1 - Introduction and Basic Information
The offer letter should begin with a statement that includes information such as the position title, start date, full-time or part-time status, and shift (if applicable). Avoid using phrases that imply an indefinite future of employment and consider including language that states that the company has the discretion to alter or rescind information contained in the offer letter during the course of employment.
2 - Job Details
The offer letter should provide specific details on the salary or wage and pay periods. Employee compensation should be stated on an hourly, a weekly, or a per-pay-period basis. This is a way to set the expectation that an employee is incrementally paid and will not receive a full annual salary if terminated midyear. It’s appropriate to include the supervisor or manager to whom the employee will report to, as well as the performance evaluation period or appraisal date.
3 - Benefits Information
It’s helpful to the candidate to provide a summary of the benefits package and eligibility requirements for health care insurance, 401(k) plans, life insurance, educational assistance, flexible spending accounts, disability, and accidental death and dismemberment coverage. You may also wish to attach details of the full benefits package to the offer letter.
4 - Vacation/Paid Leave Details
The amount of leave that the employee is entitled to should be clearly outlined including holidays, paid time off or vacation, sick, and personal time off.
5 - Terms of Employment
This section may cover any pre-employment terms such drug testing, background checks, confidentiality agreements, non-compete agreements, and compliance with immigration law.
6 - At-Will Employment
A statement that the employment relationship is at will is an important part of the employment letter. This allows the employer the right to terminate the employee at any time, with or without cause, and gives the employee the right to resign from the position.
7 – Closing
Now that the formalities have been covered, the closing of the letter is an excellent place for you to express your excitement in bringing the employee on board! The letter should conclude with a line for the employee's signature and date, and state the date by which they are to return the signed copy to you. Be sure to sign the letter and also include your contact details should the candidate have any questions.
Creating an offer letter template that includes these seven essential elements will make your offer process smoother for both you and the candidate. As with any employment document, it is important that the letter is reviewed by your legal counsel prior to implementation.