What is an offer letter?
An offer letter is a formal document sent by the employer to the candidate to offer a job. The offer letter is used by employers as it is a formal document that can be sent out fast to the candidate to secure his/her commitment to the job presented, whereas the employment agreement usually requires different steps of approval internally.
The offer letter is usually the final step of the hiring process and is sent to the successful candidate once they have successfully completed the interview process with the hiring managers, and once they have fully passed the reference check.
The offer letter is widely used by recruiters before issuing the final employment agreement and it serves as a confirmation of the employer's intent to hire the candidate.
Mandatory requirements of the offer letter
The offer letter outlines the terms and conditions of the job offer and must present :
- Company logo and formal legal company letterhead
- Contact information and date
- Job title and Job description
- Gross basic salary (monthly or yearly)
- Benefits: Health insurance, provident fund, allowances, and other perks such as paid time off or bonuses
- Start date
- Signatures of the parties
Difference between the offer letter and the employment agreement
In most cases, the offer letter is contingent upon the final additional steps the new employee needs to follow, such as:
- Successfully pass the background check
- Successfully pass the background check
- Successfully pass the medical visit or pre-employment drug testing (when required by local regulations)
Until you have signed an offer letter with an employer, you are still allowed to accept other job offers from other potential employers.
Nothing is legally binding until the final employment agreement is signed by the employer and the new employee.
In summary, an employment agreement is legally binding, whereas the offer letter is a way for the employer to secure your commitment to the new role.
