The Top Ten Things to Include in an Offer Letter
By Jon Piggins, Executive Recruiter, IT Sales & Marketing
Offer letters are used to inform a prospective employee that he or she is being offered a position. The offer letter provides general expectations and basic terms of employment if the candidate accepts the offer.
Employment agreements are generally more formal documents that go into greater detail in defining an employment contract, such as setting forth the performance and duties and the remedy for any breach of contract.
What to Put in an Offer Letter
This is an exciting moment for both the candidate and the company, and the hire is not over until everyone has signed on the dotted line and the work has begun. So convey your excitement and close the deal!
Ex. On behalf of (Company), I am pleased to offer you employment on the terms and conditions set forth in this letter. We look forward to working with you and believe that you can make a very significant, positive contribution to the success of (Company). Our company offers you an opportunity to put your experience, abilities, dedication, energy and creativity to excellent use. Welcome to the team!
2. Title, Reporting Structure, Location, Start Date
The title of the position should be included, as well as the title(s) of the positions that the prospective employee will be reporting to. This is an ideal place to add the location of work for this position and the start date.
Ex. This is an offer of employment for the position of (Title) with a start date of (Start Date). In this capacity, you will report directly to (First Name Last Name, Title). This position will be located at our (Location) office.
A description of the responsibilities and expectations needs to be addressed, at least in general terms. Attaching a copy of the job description used to find the candidate is also an option. A disclaimer that the employer has the right to change the position, modify or assign additional responsibilities should also be set forth.
Ex. You will have the responsibilities and accountability defined in attachment (Job Description) as specified and updated from time to time by the (Name, Title).
Ex. (More detail)
You agree to perform such duties and responsibilities as are assigned or delegated to you from time to time by your manager or as assigned by the company. You agree to devote your full-time attention and best efforts to the performance and discharge of such duties and responsibilities and to perform and discharge such duties and responsibilities faithfully, diligently, and to the best of your abilities.
4. Compensation & Benefits
The base salary and any bonus or commission should be described along with the payment period. Benefits may be described or referred to. The right to amend or rescind compensation agreements and benefit plans and programs, including employee contribution levels, should be reserved.
CEOs and highly compensated sales people may require more formal employment agreements in order to spell out commitments such as golden parachutes, commission structures, equity, etc. but in many cases the offer letter can address compensation.
Your initial compensation package includes a weekly salary of (Dollar Amount, Pay Period), full medical and dental coverage through our company’s employee benefit plan, and fringe benefits as covered in the enclosed pamphlet/attachment.
Ex. (More detail)
Your starting salary will be (Dollar Amount, Pay Period) and will be subject to review. Should you successfully complete the probationary period (reference), you will also be eligible to receive an annual bonus of (Dollar Amount/Percentage of Starting Salary) that will be based on a combination of MBOs and company global performance. Your MBOs will be established on a quarterly basis based on mutually agreed objectives. You will also be eligible to participate in regular health, dental and vision insurance plans; bonuses and other employee benefit plans established by the company for its employees from time to time.
5. Vacation / PTO
Provide the company vacation and/or paid-time-off policy if not yet covered in the Benefits section.
Ex. (This may be joined onto the preceding paragraph)
You will be eligible for 3 weeks personal time annually which will accrue pro rata over each year of employment in accordance with the company policy.
6. “At Will” / Exempt
Most employment relationships are “at will” and if this is the case it should be clearly addressed in the written offer letter. Elaboration of the point might include language such as the employer is free to discharge individuals for good cause, or bad cause, or no cause at all.
If the employment offer is for an exempt position, then state it. There are three typical categories of exempt job duties, called “executive,” “professional,” and “administrative.” If the position is for nonexempt employment, you’ll need to have an overtime policy in place or follow FSLA regulations.
Ex. You will be classified as an exempt executive-level employee. Your employment with the Company will be on an “at will” basis, meaning that either you or the company may terminate your employment at any time for any reason or no reason, without further obligation or liability. The company also reserves the right to modify or amend the terms of your employment at any time for any reason.
7. Non-Compete Clauses
The offer letter should address non-compete clauses. Condition the offer on the basis the candidate is not bound by any contractual restrictions or conflicting obligations. If the company desires a non-compete clause as part of the employment terms in the position, it needs to be clearly expressed that acceptance of employment is subject to agreement to the company’s non-compete class.
Acceptance of the offer and commencement of employment is contingent upon the candidate execution and company receipt of the Company’s Confidential Information and Invention Assignment Agreement (This may be provided as an attachment.)
9. Conditions / Contingencies
The offer is contingent upon successful completion of all paperwork such as references, employment verification and a background check.
Ex. This offer of employment is conditioned upon completing the company’s non-compete agreement (attached), confidentiality agreement (attached), and successfully verification of the background and reference checks.
10. Expiration / Next Steps
The offer expiration should be set forth clearly (sign below and return to specific person). The expiration period should only be a few days.
The prospective employee should also be advised on the next steps, who to contact once acceptance of the offer has been made in writing for example. The contact person for any paperwork, and any information relevant about the onboarding process, first day(s) of work.
Ex. We look forward to working with you at (Company). Please sign and date this letter on the space provided below to acknowledge your acceptance of the terms of this agreement. Please return offer letter to (Contact Name and Return method) no later than (Time and Date). Once we have received your signed offer letter, (Name, Department) will contact you to go over remaining paperwork and next steps.
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About the Author:
Jon Piggins, Executive Recruiter, High Tech Sales & Marketing
Jon is personable, knowledgeable and completely reliable. He has extensive sales and business development experience, in both B2B and B2C. Put Jon’s business insights and acumen to work for you by expediting your talent acquisition and hiring processes.
About Redfish Technology:
Founded in Silicon Valley in 1996, Redfish Technology has been a leading provider of high tech professional and executive talent. Partnering with growth mode companies, small and large, Redfish staffs executive functions and builds out the teams below. The company provides services nationwide and has offices in Silicon Valley, the East Coast, and Sun Valley.