What is an Offer Letter ?

An offer letter is an informal offer of employment that is typically made to confirm a verbal agreement. Offer letters are not meant to be contracts—they simply summarize the employer’s employment offering to it’s prospective hire. If an offer letter is improperly constructed, that offer letter could inadvertently form a legally-binding contract. The employer in that case would be held to all the terms of that contract—despite the employer’s intentions to merely send an offer letter. This can be extremely costly to the employer.

An offer letter typically includes basic benefit information. Examples of employee benefits include disability, medical, dental and vision insurance; tuition reimbursement; stock options and profit-sharing; and vacation and sick time. Explicit information regarding these benefits are typically included as part of a benefit package, which may be provided along with the offer letter (or offer letter email) or once employment begins. Employers may send benefit packages along with offer letters so that potential employees are aware of any paycheck deductions for certain benefits. Employees might also want to consider other costs, such as co-payments, deductibles and coinsurance.