5 Reasons Why Businesses Need to Send Offer Letters

Posted on October 30, 2016

Start Off On the Right Foot with an Offer Letter

I’m always a little surprised when I meet employers who do not use offer letters. Many times they will say that they don’t think that certain job levels need to receive offer letters, or they feel they just don’t have time to produce the letters. They feel confident they can bring on their awesome new-hire based on a verbal agreement, and that should be enough.

However, I always recommend that employers give new hires written offer letters for every position and here’s why:

1. Offer letters start the employment relationship off on a positive note. This is a great opportunity to welcome your new hire to the company. A good offer letter is direct and positive.
2. Offer letters are a great way to establish expectations up front. Most offer letters include the new employee’s title, starting salary, work location, supervisor and hours of work.
3. Offer letters serve as a legal basis for employment and can be valuable documents if there are future questions or issues.
4. A job offer letter allows you to itemize the facts about the offer, outline the job’s responsibilities and highlight relevant details about the company. In the event that the candidate wants to negotiate issues like salary or vacation, the job offer letter serves as the reference point.
5. Many candidates do not feel comfortable resigning from their current position without an offer letter from their new position. An offer letter allows new employees to feel confident in their decision to join your company.

Items to include in a job offer letter:

• A Congratulatory statement that includes what their position will be, what team they will be joining and who their supervisor will be;
• Salary: State the starting salary or hourly rate, frequency of payment If your company offers performance bonuses or stock options, state these clearly and in full;
• Conditions of employment (full/part-time, temporary/regular, exempt/non-exempt);
• Benefits:  Briefly describe the benefits coverage provided by your company such as dental, health and/or other types of insurance. Note that benefits information will be communicated in further detail upon orientation of the new employee;
• Vacation, sick or paid time off benefits you offer;
• Dates and Times: Be explicit. For instance, state when you want the signed offer returned, expectations concerning hours of work per week, and the job start date and time;
• Name Relevant Documents: If your company requires new employees to sign other documents, such as non-confidentiality or non-compete agreements, attach them to the offer.;
• Contingencies: state if the offer is contingent on a background check or the pending forms or tasks such as tax forms, confidentiality agreements, drug screens or physicals. The purpose of including contingencies is to protect employers from legal obligations should an offer of employment be rescinded based on information obtained after the offer was extended.
• At-Will Employment: Inclusion or an at-will statement in an offer letter is essential to protect employers from wrongful termination lawsuits;
• Excitement for the future

Offer letters may seem like unnecessary nuisances to some employers but they are invaluable tools to help start off the employment relationship with your new employee right. Employers should draft offer letters and give them to newly hired employees before their first day of work. A good offer letter can be direct and will help job seekers feel valued that you as an employer are making a commitment to them and are excited to have them on your team.

Lauren Sims is the author and a principal HR Consultant with eqHR Solutions.Whenever you require Human Resources or Payroll advice, or help navigating the ever-changing landscape of California and Federal Employment Laws and Regulations, call us for a no obligation consultation.

eqHR Solutions is a leading human resources and payroll consulting firm, providing tactical and strategic human resources employment support and ADP payroll product training. Services are provided for all size businesses in Southern California and the San Francisco / Bay area.