For many companies, recruiting an employee may involve drafting an offer letter and/or employment contract – and for good reason. These two Hour documents can assistance organizations minimize the risks associated with hiring, like losing a candidate to the competition or even legal activeness due to wrongful termination. These are serious concerns because employment lawsuits are up, thanks in large part to the COVID-19 pandemic . But these two Hour documents aren't interchangeable, peculiarly when it comes to legalities. At that place are serious differences between an offer letter and an employment contract that all companies should sympathize.

Offering Letter Vs. Employment Contract

Deciding between presenting a c andidate or employee with a chore offer alphabetic character or an employment contract comes down to whether you want the relationship to be legally binding. Whereas an offer letter is unofficial (avoiding statements that promise time to come wages or employment), an employment contract is exactly the opposite, setting wages and length of employment in legally binding rock.

An Offer Letter

An offering letter is a formal document sent to a candidate offering them a job at a company. It includes bones information about the position – kickoff engagement, championship, salary, onboarding information – and offers written confirmation that an employer is selecting the candidate for the job. A job offering alphabetic character typically is sent after the offer is made over the phone or by email. But even at the point of offer letter receipt, the task offer isn't necessarily set in rock. Many companies ready contingencies before employment begins, like a completed background check or drug screening.

Some of import details well-nigh an offer alphabetic character are:

  • It is Not a legally binding contract
  • It does NOT include promises of future employment or wages
  • It includes an employment "at-will" argument. Every country, except Montana, presumes at-will employment. At-volition ways that an employer tin can terminate an employee at any fourth dimension for whatever reason, except an illegal one, or for no reason without incurring legal liability . In turn, an employee is gratis to exit a job at any time for any or no reason with no agin legal consequences.

An Employment Contract

An employment contract is similar to an offer letter. An employment contract is a signed agreement betwixt an employee and employer or labor matrimony. It establishes the rights and responsibilities of both parties . Where an offer letter tin can be vague about time to come statements, an employee contract puts them front and center.

Details to consider about an employment contract include:

  • It IS a legally bounden contract between employer and employee
  • Information technology includes specific details about employment
  • It may make specific stipulations on employment conditions that differ from "at will"
  • Employers and employees cannot break the contract without consequences
  • It promises employment for a prepare corporeality of time and set wages

Best Practices for Drafting Offering Letters

According to SHRM , when writing an offer letter, you should:

  • Avoid using phrases that imply an indefinite future of employment . Statements such equally this can include "job security," "we're a family company" or "in the future." Your offer letter should include language conveying that the company tin can alter or rescind any data contained within the alphabetic character when needed. For case, if you hire an employee to work a solar day shift, y'all may want to allow for the possibility that you will require him or her to work afterwards hours or on weekends if needed.
  • Eliminate verbiage that makes promises about hereafter earnings . Don't hope consistent bonuses or raises. If these conditions tin't be met in the futurity, i.due east., your visitor earnings don't support an almanac bonus this year, you could open the door to lawsuits from your employees.
  • Let your legal department review it . Before sending a chore offer alphabetic character, let a legal proficient review it for linguistic communication or statements that could lead to a potential lawsuit. Consider creating an offer alphabetic character template. Using the same template will salve fourth dimension and ensure every offering meets your legal standards.

Best Practices for an Employment Contract

The purpose backside employment contracts is to clearly define the function and responsibilities of both the employer and employee. A written employment contract is but that: a contract that must be upheld by all parties. Breaking the contract could lead to legal consequences.

  • Don't forget to add together essential clauses. An employment contract should include bacon information but likewise clauses nearly the duration of employment, particularly when dealing with marriage contracts, confidentiality, future competition like noncompete agreements and ownership agreements . Buying agreements may apply to the employer owning whatsoever work-related materials produced by the employee, or peradventure communication devices and/or work equipment.
  • Clearly define responsibilities and benefits. I of the biggest benefits to an employment contract is that it doesn't exit whatever wiggle room for interpretation most pay benefits, length of employment or even what happens if the contract is broken. Make sure your employment contracts are drafted with this in hateful, laying out responsibilities in impress and so all parties involved – employees and employers – are protected.
  • Check and double-check.  Once a contract is signed, there'due south no going back. The stipulations written in must be met. Because an employee contract is binding, there are legal consequences for breaking the terms, on both sides. Brand certain everything you desire included about the working human relationship of your employee(s) is included in the contract and anything you don't want, isn't.

A bully offer alphabetic character can aid companies seal the deal when recruiting a new employee. Arcoro'southward Applicant Tracking System  allows HR managers to automate the offer alphabetic character procedure then they can send customized offers directly to the applicant with all the information they demand to accept your offer through electronic signature.

One time the letter is signed, a copy can be stored in Onboarding module's electronic filing chiffonier. Arcoro's Onboarding organisation  not only makes a great impression with a smooth, stress-free system, simply it is 100% paperless and cloud-based, giving Hr departments the ability to streamline the process and eliminate data input errors.

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