After interviewing dozens of candidates, maybe even more, you’ve finally figured it out. You know who you want to hire. Now, all you have to do is draft up an offer and send it over for them to sign. Easy, right?
Actually, writing an offer letter that candidates agree to might involve more than you may think. Even if you’ve already discussed the ins and outs of the role before reaching the decision phase, your offer letter is your one last chance to make the case for why a candidate should work for you.
What Is an Offer Letter?
An offer letter is a written document given to job candidates that acts as a formal job offer and outline for the terms of employment.
Around one in six job seekers turn down jobs once they’re offered, according to a 2020 survey from Glassdoor. This means just sending an offer letter out doesn’t necessarily mean you’ll get a yes back. If you want a candidate to join your company, you have to give them an offer they can’t refuse.
“Throughout the entire process, every single touch point, we are selling the role to our candidates,” said Hailey Hastings, head of talent acquisition at Toronto-based automated brand interaction company Ada. “You want to make your offer exciting for the candidate, so that they know what their impact will be.”
Sending and signing an offer letter is the final step to recruiting a new teammate. Here’s how to write one they simply can’t turn down.
Offer Letter Basics
Run It Past Legal
Offer letters aren’t necessarily legal documents, but if an employee agrees to the terms set out by an employer in an offer letter, it can be argued that the employer is legally bound to deliver on the conditions listed in that letter. If you fail to meet the obligations you promised in your offer letter, it may come back to bite you.
“Something that was legal a month ago, might not be anymore, and might be ruled against you in the future if you don’t change it,” said Joanna Woo, head of people at Calgary-based industrial process automation company CruxOCM.
Since both you and your future employee will be putting signatures on the offer, Woo said it’s crucial that HR leaders run their offer letters by a legal professional before sending them out to candidates.
“A lot of HR professionals don’t have that legal training or background. It’s always best to talk to an employment lawyer,” she said.
While your offer letter outlines all the terms and conditions of the role, it shouldn’t be the first time candidates learn of them. Remember, your offer letter should be a confirmation of what you’ve already discussed and nothing listed in it should come as a surprise.
“At CruxOCM, our offer acceptance rate is high because we are very transparent,” Woo said. “We talk about salary right from the beginning, as well as timelines, approximate start date, and the role’s responsibilities. None of that comes as a surprise; the offer letter is more of a formality for us at that point.”
Throughout the interviewing and candidate screening process, make an effort to be as transparent as possible about what they’ll be getting if they join your team, and what the role’s expectations will be. If you wait until writing your offer letter to share info about equity or benefits, you run the risk of not getting a candidate’s signature.
“If we can’t give the candidate what they want, we need to tell them up front,” Hastings said. “It’s not fair to sell them something they won’t actually get.”
Get Candidates Excited
Reaching the offer letter stage means you’re in the recruiting home stretch, but sending one out doesn’t mean you’ve crossed the finish line. Competition for talent is high, and your offer letter may not be the only one in a candidate’s mailbox.
“It’s a very hot market,” Hastings said. “Candidates are getting five or six offers, whereas before they were getting maybe one or two.”
Because of the tough hiring market, employers need to look at their offer letters as a tool to lock down top talent. Think beyond the traditional PDF or document, and use your offer letter to get an enthusiastic yes from candidates. Scott Ginsberg, senior content marketing manager at San Francisco-based compensation software company Pave, said that compelling visuals are one thing employers can include in their offer letters to get candidates excited about their potential role.
“You can win more candidates by helping them visualize the upside of their offer, most notably with a visual offer letter,” he said. “This can help you eliminate confusion around equity by visually communicating total rewards to employees, and deliver a transparent and compelling narrative around your organization.”
What to Include in an Offer Letter
What to Include in an Offer Letter
- Job Title and Role Expectations
- Start Date
- Office Location
- Termination Clause
- Acceptance Deadline
After you’ve congratulated the candidate on being chosen for the role, you’ll need to outline exactly what that role entails. It should clearly state their position, their manager and their team. Beyond that, highlighting some details about their daily tasks and how they’ll contribute to company initiatives overall will help them better see how they’ll fit into your team.
“It’s important to remind them of the impact that they will have at the company and how they’ll be able to grow,” Hastings said.
Next, you’ll need to give the candidate information about their start date, which can be determined by the amount of notice they’ll need to give their current employer as well as any recruiting timeline goals on your end. While working an exact start date into the letter is important and gives your candidate an idea of when they will begin onboarding, Woo said it doesn’t need to be set in stone.
“We never really have a hard start date of any kind,” she said. “We are a little bit more flexible about working out some of those details.”
By the time your offer letter is sent out, salary should be nailed down. That means negotiating a number you both agree on — it shouldn’t come as a surprise.Include their starting salary or hourly rate, but also take the opportunity to share insight into how that number could grow in the future. This will help the candidate see how they can progress in their career or meet their financial goals at your company.
“Don’t just tell them their potential salary — show the candidates their position in the salary band,” Ginsberg said. “If your company has a salary range, tell the employee that they are at the mid-point or maximum end of the band.”
If your company offers equity as a part of its compensation package, it’s a good idea to include some details about what can be expected in your offer letter. Equity is a powerful way to tie employees’ personal goals to the goals of your company overall, and might make them more eager to accept your offer.
“We go through our equity and give a bit of the company’s background to get them excited about how the company has grown financially, and what that will do for them financially in the future,” Hastings said. “That way, they’re invested in us as much as we are in them.”
More than just a salary, job candidates want to know that their future employer will be able to take care of their needs. In 2021, around 24 percent of job seekers listed vacation time as a top factor in choosing a role, while 22 percent said healthcare was most important, according to the Statista Research Department. Sharing information about the benefits you offer is another important way to draw candidates in, so try to be specific.
“We go through our benefits — our work from home budget, the gear they’ll be able to have, our in-house social workers, wellness fund, co-working space, and unlimited vacation time,” Hastings said.
In the last two years, in-person work has drastically changed along with remote or hybrid work models. These trends have reverberations in the talent pool, where office location and workplace models have become even important to job seekers. Around 95 percent of workers want flexible work schedules, while 78 percent said they want flexible choices when it comes to work location, according to research from Future Forum. If employers aren’t already including office location and workplace flexibility in their offer letters, they should start doing so right away, Woo said.
“With the pandemic and remote work, you should have some type of location piece in the offer letter as well, so they know what the expectation is when it comes to working in the office or from home,” she said.
After outlining all the details of the role, salary, benefits and office location, one of the most important closing items to include is information about your company’s termination policy. Employment laws vary from state to state, but in general most offers will involve at-will employment, which means that management can terminate an employee at any time. This is as long as they’re not under a valid contract or the termination isn’t discriminatory or illegal. Including a termination clause that outlines these expectations in detail are important so that there’s no confusion.
“Your termination clause needs to be spelled out very clearly,” Woo said. “That just protects everyone. The employee knows exactly what’s going to happen if that situation comes up, and the employer protects themselves as well.”
If you’re hiring an employee on a contractual basis, you’ll need to include the timeline of that contract, as well as what will happen to their employment status once the contract period has ended. In such cases, Woo said it’s smart to play it safe.
“If you set the contract period too long, and you terminate them before the contract end date, you potentially might need to pay them out for the rest of the contract,” Woo said. “Your best bet is actually to have shorter contracts, and then extend them before the contract ends.”
The last element and possibly most important element of your offer letter is the acceptance deadline. Once you’ve nailed down a start date, you need to make sure that your potential employee agrees to the offer and provides their signature before their employment begins.
“Offer letters need to be signed before the start date for them to be legally binding,” Woo said. “Sometimes companies have a verbal agreement and have somebody start and then show them the offer letter. I try to avoid that because then it’s hard to prove the start date.”
Accepting a job offer is a big decision, and while you need to know their choice before their start date, you also need to give your candidate enough time to consider their options and discuss it with their family, attorney, or current employer.
“I always make the expiration date at least one day before the position starts,” Woo said. “You need to give them enough time to seek legal advice.”
Offer Letter Examples
The Basic Letter
For companies with bigger wallets, there are software tools specifically for designing and sending compelling offer letters. But if you’re on a tighter budget, a no-frills traditional letter works just fine. Here is an example of a basic offer letter template Woo drafted up, complete with The Office references.
The Informal Offer Deck
Your offer letter should include some way for employees to provide a signature, but the offer itself doesn’t necessarily have to look like a legal document. At Ada, Hastings’ team sends out a more informal slideshow deck that candidates can scroll through to learn about the role.
“We put the person’s name, their photo, and a big congratulatory message welcoming them to the team and saying we’re excited to have them,” she said. “Then we go through their job title, their salary, stock options, and start dates.”
The Interactive Offer
Nowadays, there are tech tools designed to help HR leaders complete all kinds of tasks, and that include drafting and sending job offers. Rather than typing up a document with salary and equity data, Ginsberg’s team uses Pave’s own internal offer letter platform to let candidates explore their potential stock options and see how they may change over time in an interactive way. Take a look below.
At Ada, Hastings’s HR team is also testing out offer letter technology and launching their own interactive letters soon. They’re planning to use the platform Welcome to provide candidates with an immersive job offer experience, within which they can explore company culture as well as benefits and compensation offerings.
“We can add videos to this of our employees talking about what it’s like to work at Ada, whether they’re in product or engineering or elsewhere,” she said. “It gets them really excited.”
Offer letters may seem like dry documents, but if done the right way, they can set an exciting tone for a future employees’ experience with you. After getting the nitty gritty details out of the way, remember to celebrate the offer.
“As a candidate, getting an offer is so exciting,” she said. “Beyond giving them a salary and title, remind them of the impact that they will have at the company and how important they will be.”
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Frequently Asked Questions
Is an offer letter legally binding?
No — by default, an offer letter is not considered a legally binding document, but the legal consequences of one can still vary depending on the specific terms it outlines.
This means an employer may rescind a job offer until a job candidate signs and accepts an offer letter. It also means that if an employee agrees to the terms outlined in the offer letter, they may be legally bound to deliver on those terms.
What is included in a job offer letter?
An offer letter for a job will often include the following information:
- Job title and role expectations
- Start date of the job
- Compensation, benefits and equity
- Office or working location
- Termination clause
- Acceptance and signature deadline