Every company has specific needs when it comes to hiring an employee. A good offer letter is a must if the company wants to employ valuable and skilled employees who appreciate a good offer. An employer sends an offer letter to the candidate selected for the job who knows the duties and responsibilities they have to perform and undertake, a detailed job description, and other essential terms of employment that should be taken into consideration by the individual before he accepts the employment offer.
What is an Offer Letter?
An employment offer letter is an agreement that clearly expresses the terms of employment and should be drafted so that no terms of employment are left to be assumed. When the hiring company makes an employment offer letter, it states all the terms and conditions of employment and the rights and duties of the person to be hired as an employee. Generally, an employment offer is to be signed by the person who accepts it, and it is signed and returned as a formal receipt.
An employment offer letter includes various requisites and details of aspects such as salary, employment benefits, and employment starting date. It should also include the job title and detailed job description as well as the position of the employee and any other terms, whether affirmative or restrictive.
Importance of an Offer Letter
An offer letter is an important document as it clearly lays down the terms of employment. It also acts as a medium of offering the selected candidate the job and for the communication of the acceptance of the job offer. Also, when there is no employment contract, it serves as an important document of the employer-employee relationship.
Job Offer Letter Template
Contents of an Employee Offer Letter
The following terms and conditions are a must to be mentioned in an Employee Offer Letter –
- Period of Employment
- Remuneration and other perquisites
- Duties of Employee
- Power of Employee
- Leaves and the terms on which they would be granted
- Restrictive Bonds, if any
Further below, we will see what each of these matters should contain.
Period of Employment
This clause should state the period of employment. If the period of employment is fixed, say 12 months, then it must be mentioned. And if the period of employment is not fixed, it must be stated how the employment contract could be terminated by either the employer or the employee. Where the period of employment is not fixed, the provisions for the notice period should be mentioned clearly in the offer letter.
Remuneration of the Employee
The offer letter must include the remuneration of the employee.
The employee’s remuneration can be in the form of salary or commission or fees, as well as the salary and fees, or salary and commission. In some cases, employees are entitled to a percentage share in profits, which should be mentioned. Keep in mind that be it salary, commission, fees or profits, the offer letter should specify the amount or the percentage.
Duties of the Employee
The offer letter should elaborate on the employee’s duties, the responsibilities he has to undertake, the instructions related to his work in the company and the policies he should follow.
Rights of the Employee
The employee’s offer letter shall include the rights which the employee is entitled to, such as fair conduct, right to information and support, salary, employees right to complain in case of misconduct etc.
Leave of Absence
The offer letter should state the number of leaves that are allowed yearly or during the period of employment. It should also clarify the grounds on which those leaves will be granted and also whether the leaves would be paid leaves or not.
The offer should clearly mention if the company wants to put a restrictive bond or pact on the employee, such as that the employee will not undertake any other work or that the employee will not misuse any of the information if the employer etc.
Further, one should note that no such condition put on an employee should be illegal.
Any agreement that is termed as void under the Indian Contract Act,1872 is void and hence an offer letter also being a kind of agreement. While drafting an offer letter, it should be taken care that it does not contain any condition or point which is termed void by the Indian Contract Act,1872; otherwise, the offer letter may stand void.
Effect of Labour Law on Employee Offer Letters
Many labour laws look into the employment of factory workers, daily wage labourers, employees working in small or mid-size firms or industrial units. Acts such as The Factories Act, The Workmen’s Compensation Act, The Payment of Wages Act, The Industrial Employment (Standing Orders) Act, The Maternity Benefit Act, etc.
While drafting an employee offer letter, one should consider that the terms and conditions of the offer letter do not violate the labour law above mentioned or any other that apply to the company.