Whether you are a business owner or a budding HR professional, hiring can turn out to be a dreadful task. From analyzing tons of resumes to scheduling interviews to conducting interviews, there is a lot that goes on behind the scene to make a successful hire. And, while you might find the perfect candidate, also, verbally agree on the terms of employment it’s only official once the offer letter has been signed.
In essence, an offer letter formally offers a position at your organization along with stating the terms of employment. Now, it’s not uncommon for new business owners or professionals to find themselves a little lost when drafting their first offer letter.
To help you out, we’ve detailed everything you need to know about an offer letter, along with sample templates that you can readily use when onboarding your first full-time employee, intern or a contractual worker.
In this article, we will be covering,
- What is an offer letter?
- What are the components of an offer letter?
- Sample offer letter
- Download free template
What is an offer letter?
An offer letter is a formal written communication sent to a job candidate by an employer. The offer letter confirms the position, compensation, and start date of the offer for employment.
Offer letters are typically sent after all rounds of interviews are completed by the candidate and is approved by the hiring manager. The letter is presented before hiring contingencies such as background checks, reference checks, among others. Once cleared, the offer letter is signed by both the candidate and the employer.
While an offer letter is a formal document communicating the candidate about his/her appointment, it is important to understand that an offer letter is not legally binding and the candidate can choose to not join the organization despite signing the letter.
What are the components of an offer letter?
- Company logo: Just like any other contract, use your company’s official letterhead to draft offer letters for potential candidates. This conveys a level of professionalism and authenticity instilling confidence in the potential candidate and encouraging them to continue reading.
- Date, candidate information, and subject: To start your offer letter, in the left-hand corner, include the date of drafting the letter, candidate’s first and last name, and their current address. Following this, include the subject line as “Offer For Employment” or “Appointment for the post of [enter position] and centre align it for better structuring and presentation.
- Greetings and an opening statement: When starting to write your offer letter there are two primary things you want to convey; one, is the excitement of having someone new join your team and two, warmth to help them feel at ease entering the new environment. The best practice is to start your letter with “Dear” followed by their first name and an opening statement along these lines of “It gives us immense pleasure to offer you a position at [company name].” or “We are really excited to have you on our team at [company name].
- Job title, type of employment, and employment tenure (if applicable): Once you’ve decided on your opening statement, it is necessary to list the primary details of the job i.e., position the candidate has been hired for, nature of employment – full-time, internship or contracted. And, the tenure of employment, in case of, hiring an intern or a contracted employee.
- Starting date and reporting personnel: After stating the specifics of the job role, it is necessary to mention the starting date of employment and who the candidate will be reporting within the company.
- Compensation and benefits: Thus far, you have successfully drafted a compelling opening statement and mentioned the details of employment. Now, it’s time to clearly communicate to the potential candidate his/her remuneration. This would essentially curtail how much the potential candidate would earn monthly and annually. Or, in the case of freelancers, this might include compensation calculated on productivity hours or tasks completed.
- Documents required and offer letter deadline: In the letter, you share with your potential employees you can also list the documents required for administrative purposes. You can further ask the candidate to share these documents along with the signed letter or present them on their first day of employment.
Also, hiring is a process that no company wants to spend a tremendous amount of time as it keeps piling on the expenses while losing out on business due to lower productivity. To tackle this, you would like to mention a deadline before which the potential hire needs to send the signed letter.
- Appreciation/Excitement: Once you’ve mentioned all the necessary clauses and details of the employment, it is important to end your letter on a positive note that inspires excitement and makes the candidate look forward to joining your organization.
- Required signatures: It is important to make sure the letter is authentic and mutually agreed upon by both the employer – you – and your potential hire. Once the signed letter is received from the candidate, the letter needs to be signed by the recruiting head. In case, your organization does not have a dedicated HR or recruitment team, the letter must be signed upon by the final decision maker i.e., CEO or MD.
Sample Offer Letter
Subject: Offer for Employment
It gives us immense pleasure to welcome you to the team at [Company Name].
We are pleased to offer you a [type of employment] position of [Job Title] at [Company Name] with a start date of [start date]. You will be reporting directly to [Reporting Manager], [Reporting Manager’s Designation].
The annual starting salary for this position is [Annual Compensation] amounting to a monthly gross salary of [Monthly Compensation] to be paid on a [Payout Cycle] basis. In addition to this starting salary, we’re offering you [bonuses, commission structures, etc.].
As an employee of [company name], you are also eligible for our benefits program, which includes,
We Request you to bring the following documents / Credentials at the time of Joining and submit these documents to the HR Department on the day you join our organization:
– [Documents Required]
Please confirm your acceptance of this offer by signing and returning this letter by [Deadline].
We are excited to have you join our team! If you have any questions, please feel free to reach out at any time.
[Authorized Signee’s Name] [Candidate’s Name]
[Authorized Signee’s Designation]
Signature: ___________________ Signature: __________________
Download Free Template
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