Payroll - Letters to Staff (Offer Letter, Relieving Letter)
Majority of the businesses that want to grow big, though small initially, with the expansion of business eventually get to the point of needing to hire more employees. A job offer letter is a formal document in writing, that informs a candidate that they have been selected for employment, and includes details thereof, such as:
- Job title or designation offered to the employee
- A brief description of the job
- Pre-conditions to be fulfilled before joining (if any)
- Starting date of employment
- Reporting structure
- Salary offered
- Other benefits extended (accommodation, transportation facility, insurance coverage etc.)
- Offer expiration date
- Acknowledgement of offer and confirmation of acceptance
If a job offer is made over the phone or email, it is ideal to follow a formal letter in writing. This letter is beneficial to both the employee and the employer as they are clear about the conditions they agree. If the candidate wants to accept the offer, it must be signed and returned as a formal acceptance of the position. On the other hand, the candidate may make a counteroffer, or choose to not accept it- by declining the offer through a formal letter or email.
In rare situations, an offer letter may also be revoked by the company.
An offer letter is by itself not a binding contract unless the candidate has accepted the offer, expressed their willingness to accept the offer, and has communicated the same to the employer. But whether an offer letter is binding or not, is also dependent upon the drafting of the offer letter.
Some of the other commonly used official letters to employees are:
- Letter of Appointment
- Letter of Confirmation
- Letter of Appraisal/ Increment /Promotion
- Experience letter
- Relieving letter
Letter of Appointment
An offer letter intends to offer a candidate who is not yet an employee of the organisation. Once the candidate expresses his or her willingness to be associated with the organisation, the company sends a letter of appointment. Offer letter indicates that the candidate is hired and will shortly start employment with the company. It is to be printed on the company letterhead and signed and stamped by authorised personnel designated by the company. It is dated as on the date of joining of the new employee. It is more detailed than the offer letter and should ideally contain:
- Detailed duty and work expectations
- Location of work
- Work timings
- Probation period (if any)
- Breakdown of salary structure
- Code of conduct
- Leave policies
- Termination clauses
- Notice period
Confirmation letters are given to employees, who have been extended full-time employment with the company beyond the said probation periods. The confirmation letter roughly contains similar information as an appointment letter but mainly highlights changes in designation, role, work location etc.
Probation periods could also be extended for providing more training, or for employees on performance-improvement-plans. Therefore, only employees fulfilling necessary criteria will get a confirmation letter, within the stipulated time as per company policies or after the extended period of probations.
Letter of Appraisal/ Increment /Promotion
Generally, appraisals are conducted at yearly intervals. An appraisal letter is given to an employee after considering the performance and completing the appraisal interview. It should contain the appraisal result, score, ranking, grade, etc. Along with this information, any changes in role, designation, band and salary are mentioned.
An increment letter is given for an increase in pay scale. It is only to do with the change in remuneration or a hike in salary. The employee is informed about the effective date of increment, along with arrears. (if the increment has been made retrospectively)
On the other hand, a promotion letter is a change in the job scale or hierarchy level. Promotions can be higher up (upward promotion) or between other processes or departments (lateral promotion). The remuneration need not necessarily change, especially if the employee has recently undergone a yearly increment or appraisal. It informs about the effective date of promotion, new designation or role, changed responsibilities, and salary structure changes if any.
An experience letter is a document that specifies that the said employee has been working with the organisation or company. This letter is generally significant when the employee resigns or terminates services with the company. It acts as proof of employment or services rendered with the company.
Along with an experience letter, a relieving letter is given by the company signifying that the employee is now relieved from services. This document displays joining date, date of resignation and last working day for the resigned employee. It also acts as a no-objection certificate and no dues pending declaration, if such terms are mentioned in the letter.
All of the above are to be printed on the company letterhead and signed and stamped by authorised personnel to carry legal weightage. HR Department is expected to maintain a copy of the letters (upon acceptance by all parties involved indicating mutual agreement of the terms and conditions mentioned in the letter) for company records.