What goes in an offer letter

A common situation: a small business finds the right person for a role after weeks of searching. The interview went well, everyone is keen, and the founder wants to move quickly before the candidate accepts another job. They send a warm email with a salary figure and a start date. The candidate accepts. Only later do questions surface about holiday, probation, bonuses and whether the job can be done from home.

An offer letter is the document that turns a successful interview into a hire. It can be short and friendly, but it is also a written record of what the employer has promised. Getting it right makes the start of the relationship smoother for both sides.

Offer letter or employment agreement?

Practices differ. In some places and businesses, the offer letter is brief and is followed by a fuller employment agreement. In others, the offer letter itself sets out all the main terms. Some places also require certain information to be given to employees in writing, sometimes within a set period after they start. What is required varies, so check what applies where the person will work.

Whichever approach you use, the offer letter should say how it relates to any other documents, so nobody is left wondering which one counts.

What to include

• Job title and a short description of the role, including who the person reports to.
• Start date, and where the work will be done: an office, at home, or a mix.
• Pay: the amount, how often it is paid, and whether the role is paid by salary or by the hour.
• Working hours, in general terms, and whether overtime may be expected.
• Benefits, such as holiday, health cover or pension contributions, where these apply.
• Any probation period, meaning an initial trial period during which performance is reviewed.
• Conditions the offer depends on, such as references, background checks or the right to work in the country.
• How and by when the candidate should accept.

Conditions should be clear and fair

If the offer depends on something, such as satisfactory references or confirmation that the person is legally allowed to work, say so plainly and explain what happens if the condition is not met. Some checks are restricted or regulated in certain places, so make sure any conditions you include are ones you are allowed to apply.

An offer letter is friendly in tone, but it is still a written promise. Only write down what you mean.

Be careful with promises

In the excitement of hiring, it is easy to write things like a pay review after six months, or a path to a senior role, or the job being permanent. Statements about future pay, promotion or security can be read as commitments. If something is a hope rather than a promise, either leave it out or describe it carefully as something that may be considered, not something that will happen.

The same applies to bonuses and equity. If you mention them, explain whether they are discretionary, what they depend on and where the full terms can be found. Vague mentions of a share in the business are a frequent source of later disagreement.

Things often left out

• Who owns work the employee creates. This is usually covered in the employment agreement, but the offer letter can point to it.
• Confidentiality, especially if the person will see sensitive information from day one.
• Restrictions after the job ends, such as not working for competitors. Rules on these vary widely between places, and some restrictions may not be enforceable.
• Notice: how either side can end the relationship, and how much warning is required.

Hiring in a new place

If you are hiring someone who will work in a different state or country from your business, the rules that apply are usually those of the place where the person works. A letter written for your home location may need changes. This is one of the most common gaps for growing businesses.

Before you send it

1. Read it from the candidate's point of view: is anything unclear or open to more than one reading?
2. Check it matches what was said in the interview.
3. Make sure it fits with your employment agreement, handbook or policies.
4. Confirm it works for the place where the person will actually work.

ArieFirm's ready-to-use offer letter walks you through these points with guided questions, so the main terms are covered before you send it. For senior hires, unusual pay arrangements or a new location, it is worth having a lawyer review the letter and the employment agreement together.