What Should Be in an Offer Letter?

Whether you’ve written hundreds of employment offer letters in your HR career or you’re completely new to the practice, it’s worth reviewing what information should be included in one.

First and foremost, an offer letter is a formal written document given to a job candidate by an employer, offering them a position. It can be written in an email or in a physical letter.

While an offer letter isn’t a legally binding document, it still validates an employment offer and lays out the terms and conditions of your new employee’s position. Plus, an offer letter gets your new employee excited about joining the team.

Putting the right information in an offer letter can be tricky, and wording the terms of your employee’s contract can be even trickier. We’ve got your back.

Read on to learn what information you should include in offer letters… and what information or language you should avoid using.

Job title and description

Since an offer letter is an offer of employment, it makes sense that you’d want to write down all the details of said employment. This may even help prevent miscommunication between an employee and management.

Start with the basics and include the job title, and write out the job description. What are the employee’s responsibilities for this role? What will they be doing day-to-day? It’s okay to describe their job duties in general terms. Don’t get too specific, lest an unhappy employee comes back to you in the future because their role has changed (as they tend to do nowadays.)

Be sure to include other important tidbits of information, such as:

  • Starting date of employment
  • Probationary periods, if any
  • Reporting structure: the employee’s supervisor, manager, or team
  • Salary or hourly rate
  • Schedule (are they full-time or ppart-time)
  • Classification (are they exempt or non-exempt?)

Of course, what you include in an offer letter depends on your business and hiring process, so feel free to add more information in this section of your letter.

Company policies and benefits

You don’t have to include your entire employee handbook in the offer letter. Keep it short. Include a statement that their employment is subject to company policies and procedures as they are revised, adopted, or deleted at the company’s discretion.

That being said, make sure you lay out important company policies that your new employee will need to know from the beginning. That includes the timekeeping process, required breaks, or overtime pay policies for non-exempt employees. Write out their work schedule, including typical start and end times for their workday. If their hours are flexible, clarify how. If they’re eligible for paid sick time, vacation, bonuses, healthcare plans, or 401(k) options, describe those in your letter.

Important clauses that might save you in the future

If you included the salary or hourly rate in your offer letter already, great. However, be careful with how you describe those amounts. An offer letter isn’t necessarily a legal document, but you may bind yourself to an obligation unintentionally. For example, a real estate company in the late 90s was forced to pay a terminated employee 1 full year’s pay of severance… after he had been fired 10 months into his employment. Why?

Their offer letter to the employee stated, “During the first 24 months of employment, if your employment is terminated by the Company, then the Company will pay you the equivalent of 1 full year’s pay including benefits.” Since they created a term of employment by saying “24 months,” that negated the “at-will” clause that should be included in the letter.

An at-will clause means that either you or the employee can terminate their employment at any time. Be sure to include an at-will clause, and avoid using any language that specifies a fixed period of employment. Describe compensation in terms of amounts per week and what that amount would be for a year. For example, describe it as “$X per week, which is the equivalent of $Y per year.”

In addition to an at-will employment clause, check that you have included any other clauses that are appropriate for your business. That might include:

  • A confidentiality agreement or non-disclosure agreement (NDA), which protects your company information from being shared
  • A non-compete clause, which means an employee who leaves can’t immediately work for a nearby competitor
  • A non-solicit agreement, which means an employee can’t quit and persuade their coworkers or your clients to follow
  • Any contingencies. If the job offer is contingent upon a background check, drug test, valid driver’s license, reference check, active certifications, and proof of right to work in the U.S., cover your bases and make sure you mention that in your letter.

Don’t ask an employee to sign the letter

This sounds like a weird piece of advice, but we promise it makes sense. At the end of the letter, include some congratulatory or celebratory comments and excitement for the future. Give directions on how your job candidate should respond, and a deadline if the offer expires. Include your signature, and that’s it.

You can even include a sentence along the lines of “this letter is intended for informational purposes only and is not intended to be a binding contract.” Don’t ask your job candidate to sign and “accept the terms” of what you stated in their letter. Then it could be considered a formal contract. While we’re at it, don’t use the words “guaranteed” or “entitled” in your letter either, unless you’re saying “not guaranteed” or “not entitled.” Careful use of language can save you from legal headaches down the road.

An offer letter is part of the applicant experience

Writing a good offer letter that won’t bind you legally sounds like a headache, but it’s worth doing. Giving a job candidate a written offer letter is part of creating a thoughtful, welcoming applicant experience. Take the time to create job offer templates that look professional and build excitement for your new employees. It’s okay to celebrate adding someone to your company’s team! At the same time, an offer letter should reduce liability risks and serve as points of reference for their employment. Make sure you’re covering the bases and protecting yourself and the company, just in case.