I posted this this week on my regular blog (www.viewfrommadisonave.blogspot.com) but thought it worth sharing with Recruiting Blog readers.

There are many misconceptions about offer letters.  However, before you read this post, please be aware that this is not intended to be legal advice. However, I want my readers and candidates to know what an offer letter is and is not.

Up until about 15 years ago, some of my candidates got offer letters, some did not.  It made no difference.  Today, it is a matter of course.  In fact, most of my candidates will not resign from their existing company until they receive an offer letter.  They are correct to wait for the letter.  However, even if they have one and it has been signed by both parties, it is not a contract of employment.  An offer letter merely spells out a company’s intention to hire, but it is not a guaranty of employment and it is not a contract.  

Offer letters are always for the protection of the hiring company, not the employee.

However, a proper offer letter should contain a number of items.  Among them:

-       Start date

-       Salary

-       Reporting structure

-       Duties and responsibilities

-       Eligibility for and timing of commencement of benefits

-   Other job perks

-       Bonus eligibility and details

-       Anything else discussed upon which the offer acceptance is based

According to Rick Kurnit, partner of the law firm, Frankfurt Kurnit Klein & Selz, one of advertising’s foremost legal experts, an offer letter becomes a contract only if it spells out severance.  If one resigns based on reliance on the letter, the hiring company might be responsible for reasonable loses based on that reliance – for instance, if a candidate agrees to move, hires a moving company and pays a non-refundable deposit, it is possible that the hiring company might be responsible for that cost even if the offer is withdrawn. In my experience, when things like this happen, most companies are pretty reasonable.

In my non-legal opinion, if a person resigns based on reliance of the offer letter and the offer is rescinded and the previous employer refuses to re-hire the departing employee, there could be recoverable damages.  

Because most offer letters state that employees are “at will” (meaning that they can be terminated any time and for any reason) and do not contain severance, they really offer the new employee no commitment, even during the period between the time an offer is extended and the time a person starts work.  (If there is a severance agreement as part of the offer letter, during the notice period between, the offer letter might possibly be a valid contract and, I suspect, the offer letter would only protect the new hire to the extent of the severance.  One must consult an attorney to determine if that is so.).  The Catch 22 is that a, few companies give severance except to their most senior employees and sometimes not even then but, you might have to sue to recover the severance.

The bigger issue then becomes that you may have to sue the hiring company and undoubtedly they have bigger resources than you do; especially [if they are owned by a major company].  And the truth is, they know it. 

 

I have previously written about contracts. I cannot stress this enough: if, during interviewing and negotiating, there are agreements and understandings (e.g. salary reviews, promised raises, bonuses, promotions, anticipated career paths, etc.) and those agreements are not in the offer letter, they do not exist and are not part of the hiring agreement. I have candidates tell me tales of woe all the time, especially when a hiring manager leaves and no one has been told about agreements made prior to hiring.  

As an aside, I find most offer letters cold and filled with legalese.   Sometimes offer letters are formulaic and look as if written by a patent attorney.  They are unnecessarily harsh documents.  There is no reason why an offer letter cannot be welcoming, warm and exciting while and still containing all the necessary language. (If any of my readers would like to see samples of great offer letters, I would be happy to share them.)

Views: 1276

Comment by Bill Schultz on August 14, 2012 at 7:01pm

HI Paul- Thanks for the blog.  I'd like to see some sample offer letters.  Thanks!

Comment by Paul S. Gumbinner on August 14, 2012 at 7:44pm

Bill, I would be happy to.  Can you send me your email address and I will send to you tomorrow after i can get into my computer.   If you need it: my email is paul@gumbinnercompany.com

Comment by Kester Piao on August 14, 2012 at 9:04pm

Hi, Paul! Thanks for the great article.  I totally agree with you that an Offer Letter is not necessarily cold and harsh, but people generally are reluctant to change, especially those with big companies.  So, I think I will have to earn their respect and trust then coach them on tiny but important matters like wording of an Offer Letter.

Comment by Kester Piao on August 14, 2012 at 9:05pm

Paul, I would also like to see some samples of excellent offer letters.  I sent you an email to the address you gave.  Appreciate a lot if you could share at your earliest convenience.  Thank you!

Comment by Suzanne Levison on August 15, 2012 at 6:05pm

Excellent. Needed to revisit this topic

Comment by Vivian on August 16, 2012 at 12:59pm

Thanks Paul! Very informative.

Comment by Lisa J. Green on August 21, 2012 at 8:31am

Hi Paul,

I often go to legal websites to obtain this type of communication because I want to be certain it's legal and I don't forget anything - they are certainly not as warm and welcoming as I would like them to be. I would love to see some samples of great offer letters you have; my email address is lgreen@green-it-tech.com. Thank you.

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