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An offer letter is a critical document that all businesses, startups or large corporations, need to send out when they hire someone. It sets the right tone for new hires, what is expected of them, and protects a company from unforeseeable circumstances like confidential information getting leaked.
Let’s understand what an offer letter is and what it includes. Also, get free offer letter templates in MS Word (editable) and PDF format.
What is an offer letter?
An offer letter is a formal document sent to the candidate who successfully clears the selection process for a particular job position. It contains all the critical information about the job offer, role, and the company.
A signed offer letter implies a basic legal contract between you and your new employer. However, the employer can revoke the offer under section 5 of the Indian Contract Act, 1872:
“A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.”
Similarly, “ An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.”
What is included in a job offer letter?
Employers must ensure that the following critical information is included in the job offer letter:
1. Job title
The potential employee’s position at work and level of responsibilities after getting selected.
2. Job description
A written narrative that lists down the core responsibilities, general tasks, and other associated duties.
3. Starting date
The scheduled date when the new hire is expected to join the company and start working.
4. Work schedule
The expected volume of work, like hours per day or days per week, that the employee must put in at the job.
5. Reporting structure
The inter-relationship between various authorities within a company. In other words, it describes the hierarchical chain of command – who reports to whom.
The compensation paid to the employees in exchange for their service. An employer needs to factor in various components of salary while calculating it in India. Typically, it includes base salary, wages, commissions, incentives, etc.
[Read more about salary structure, components, and calculation here]
We understand that salary calculation can be tedious. Sign up on RazorpayX Payroll for free to use the CTC calculator and salary preview tool. Using these, you can generate the salary structure and see an employee’s in-hand salary by entering a few details.
7. Employee benefits
The indirect and non-cash components paid to the employees over and above their salaries.
8. Privacy policies
A section of the offer letter that discloses how the employer manages customer data and how the prospective employee has to follow it.
9. Termination conditions
The clause or provision for terminating an employee’s work within an organisation.
Offer letter template
You can download the above offer letter for free in Word (editable) or PDF format from below. Both versions contain the offer letter format with salary structure.
Download Offer Letter in Word for Free
Download Offer Letter in PDF for Free
Generate offer letters with a click in RazorpayX Payroll
RazorpayX Payroll is a modern HR and payroll software that comes with in-built HR letter templates, including offer letters. You can also customise the offer letter template as per your specific requirement or add a new one.
What’s more, you can use the in-built salary preview tool and CTC calculator to calculate the take-home salary and CTC quickly. All with a few clicks. RazorpayX Payroll automates employee payments and compliance filings like TDS, PF, ESI, PT, and more.
1. How long does HR take to issue a job offer letter?
The time taken depends on several factors. Offer letters containing specific and complicated employee benefits may take a little longer to prepare, possibly a few weeks. Overall, the time taken to roll out offer letters post-selection falls in the range of a few days to two weeks.
2. What is the job offer acceptance rate?
It is a metric that depicts how many of the rolled-out offer letters are accepted by the selected candidates. The acceptance rate is computed by dividing the number of accepted offers by the total number of job offers rolled out. The higher the acceptance rate, the better it is for the employer.
3. Is an offer letter legally binding?
Once a job offer is accepted, it becomes a legal contract between the employer and employee. The employee has the right to the job; however, the employer can revoke the offer under certain conditions mentioned in the Indian Contract Act, 1872. The offer letter may or may not have a fine print or clause in which the employer has explicitly mentioned the consequences of not joining the company.
4. How long is an offer letter valid?
It is usually mentioned in the offer letter or the HR/employer will tell the candidate over the phone or email. Usually, a week is given to candidates to think about the offer.
5. What is the difference between an offer letter and a joining letter?
An offer letter is the first formal document sent to the candidate after clearing all selection rounds. However, it can be turned down by a candidate or passed onto a different candidate by the employer. A joining letter or appointment letter is the final confirmation that the candidate has accepted the offer. Also, the latter is more detailed regarding the role and position.