Comprehensive documents are used by businesses to help establish the working relationship between the company and its employees. Contract letters help to define the particular elements of the company’s working relationship with each individual employee. Understanding how to write a detailed contract letter can help both parties hold each other accountable during the employee’s tenure with the company.
In this article, we will explain what a contract letter is, why it is important, and how to write one. Continue reading!
What is a Contract Offer Letter?
A contract offer letter is a formal document that employers give to new employees when they begin working for the company. This letter is given to employees prior to accepting and beginning their duties in a new position. This ensures that both the employee and the employer understand the specific terms of employment for a certain person.
Why is a Contract Offer Letter Important?
Below are the numerous reasons why a contract offer letter is important:
- Set the terms of employment
- Create a paper trail of a job offer.
- Allow the prospective employee time to consider whether or not to accept the position.
- Establish both the employer’s and the employee’s expectations.
- Serve as a springboard for negotiating an employment contract
What Should be Included in a Contract Offer Letter?
Here are some details that should be included in writing your contract offer letter:
- Position in the workplace
- Name of the company
- Employee hire date
- Contract status
- Wage or salary information
- Advantages for the company
- Periods of training or probation
- Employment conditions
- Other pertinent company data
How to Write a Contract Offer Letter
Here are eight steps to help you create a comprehensive contract offer letter:
- Make an introduction
Begin your letter by providing a brief introduction to your company and the purpose of the letter. This could include making an offer of employment or awarding a temporary contract. This section is also useful for providing a brief overview of the terms and conditions you’ll be discussing in the letter.
- Detail information about the position
This section describes the employee’s precise position, title, and employment status. It also describes the duties and responsibilities that the individual may have in the role. It can also describe the employee’s work ethic as well as performance expectations.
- Discuss compensation and benefits
The following section of the letter goes over the specific compensation and benefits that the company will provide to the employee. This includes information on salary, wage, and pay period, as well as a basic overview of withholding and deductions. This may also include any advantages that an employee may be eligible for based on their employment status.
- Describe employment terms and conditions
This section describes how long you’ve been with the company. This is useful for temporary or contract positions that have a set end date. Many businesses include termination terms in this section as well.
- Include any training or probationary information
Many companies have training or probationary periods in place for new employees. By including this information, employees can understand how long it will take before the company considers them fully educated team members. This category may also include specific training programs that individuals must complete before they can be considered fully competent.
- Outline additional agreements
Integrating additional employment terms, such as background checks, can help ensure employees are aware of particular expectations in order to keep their job. This section can also notify them that they must sign a nondisclosure or non compete agreement. Furthermore, some companies inform employees that they must uphold certain standards after they leave the company.
- Inform about the decision on the agreement
The letter’s final section should explain what signing it means for the employee. Some employers include the official beginning date of employment in this section as well. This section may also inform employees that the contract letter prevails over any prior verbal or written agreements.
- Include signature information
For the contract letter to be valid, both the person offering the position and the employee must sign it. This is the employee’s formal acknowledgement that they wish to agree to the terms of employment with the company. This can also serve to reaffirm the employee’s anticipated start date.
Tips in Crafting a Contract Offer Letter
Here are some tips that could help you in composing your own contract offer letter. These are the following:
- Make the candidate feel valued: Make it clear that the prospective employee was chosen for the position because they were the best fit. Maintain a professional tone, but don’t be afraid to express how excited you are to have them join the team – express how happy you are to make the offer in the first sentence, and reiterate how much you hope they agree to in the final sentence.
- Cover the specifics: A contract letter is used to outline all of the details of the opportunity so that both you and the employee are on the same page. Make a list of the specifics you need to include before you begin writing so you don’t forget anything.
- Make Important Provisions: If the offer is conditional on the candidate passing a drug test or signing a non-disclosure or non-compete agreement, include that information in the letter. Include any forms that must be signed, as well as a clear deadline, or inform them that they must sign these forms on their first day.
- Describe the At-Will Employment Situation: Most employment arrangements these days are at will (which means that either the employer or the employee can terminate employment at any time without any cause or notice). You should also include a full contract provision stating that the letter is the sole and final offer of employment and supersedes all other communication. To be safe, mention in the contract letter that the company retains the right to change details as needed.
- Remember the Nice-to-Knows: In addition to emphasizing the formal terms, try to make the letter more manageable by including information that will reassure and orient the candidate to the company. You could also include additional company information or an employee handbook so they can ‘prepare’ ahead of time. Mentioning a point of contact who they can contact if they have any questions or concerns is also a good idea.
- Do not forget the signature: Because the candidate must sign to indicate acceptance of the offer, end the contract letter with a space for the employee’s signature and the date. Ask them explicitly to return a signed copy of the letter to a specific person by a specific date. Make it clear that signing implies that they have read and understood all of the terms of employment. If the offer is only valid for a limited time, include the ‘expiry’ date.
- Ask a legal team to review: To be safe, seek legal advice to ensure that the contract letter contains no language that could land you in hot water or contains any vulnerabilities that could be exploited.
Types of Contract Offer Letters
We provide information on the different kinds of contract offer letters that you can use in various situations. This will assist you in selecting the most appropriate contract offer letter for your needs.
An independent contractor offer letter is a contract between a client (employer) and a contractor to perform a service in exchange for payment. The offer letter should include the scope of work as well as the rates for providing the service.
An offer letter for consulting services is an effort to convince a prospective client to purchase a product or service that you are offering. In the modern business world, the letter may take the form of a physical letter.
A freelance offer letter is a document that outlines the terms of a freelancer’s employment offer. It usually includes information like the job description, payment terms, and other pertinent information about the project or work that will be done.
Sample and Template
We provide a sample and template to help you write your own offer letter, which you can use as a guide while writing. What exactly are you waiting for? Create your own contract offer letter with our assistance!
Sample 1: Contract Offer Letter
Dear [Recipient’s first and last name],
[Company name] is pleased to offer you employment on the terms listed below.
You will begin in a [part-time or full-time] position of [position title]. On [employment start date], you will report to [reporting supervisor job title and name]. You will perform the duties and responsibilities that are reasonable and consistent with your position as a [position title].
Your base salary will be [base salary information] per [week, month, year], and payroll will be done [weekly, biweekly, monthly] by [company name]. You [are or are not] entitled to company benefits as a [part-time or full-time employee], including [list of employee benefits]. The employment is for an indefinite period of time. Your employment is at will, which means you or [company name] can end the relationship at any time, with or without cause or notice.
A nondisclosure and noncompetition agreement has been attached for you to complete and return on the first day of employee orientation. This letter and any accompanying documents supersede any previous verbal or written agreement between you and [company name]. Please sign and date below if you wish to accept this offer. Please sign and return this letter by [due date]. Please contact [first and last name] at [contact information] if you have any questions.
We’re excited about having the possibility of working with you and look forward to having you on board.
[Representative of the company]
[Name of the company]
Accepted and agreed upon:
[Name of Employee]
[Signature of employee]
Sample 2: Contract Offer Letter Example
You can use the example below to help you write your own contract offer letter:
Dear Jelly Fritz,
Laura Publishing is pleased to offer you employment on the terms set forth below.
You’ll begin as an account manager on a full-time basis. On July 25, 2021, you will report to the account director, Mary Smith. As an account manager, you will carry out the duties and responsibilities that are appropriate for your position.
Your base salary will be $80,000 per year, and Laura Publishing will pay you biweekly. As a full-time employee, you are eligible for company benefits such as health insurance, retirement plans, stock options, and paid time off. The employment is for an indefinite period of time. Your employment is at will, which means that you or the corporation can end the relationship at any time, with or without cause or notice.
A nondisclosure and noncompetition agreement has been attached for you to complete and return on the first day of orientation. This letter, along with any accompanying documents, supersedes any prior verbal or written agreement between you and Laura Publishing. Please sign and date below if you wish to accept this offer. Please sign and return this letter by July 15, 2021. Please contact Emily Wright at email@example.com if you have any questions.
We’re excited about the prospect of working with you and look forward to having you on board.
Manager of Human Resources
July 10, 2021
Accepted and agreed upon:
Mary Smith, 10 July 2021
- Contract letters aid in defining the specifics of the company’s working relationship with each individual employee.
- A contract offer letter is a formal document that companies give to new employees when they start working for them. This letter is distributed to employees prior to their acceptance and start date in a new position.
- Make it clear that the candidate for employment was chosen because they were the best fit for the job. Before you begin writing, make a list of the specifics you need to include so you aren’t missing anything.
- Include information in the letter if the offer is conditional on the candidate completing a drug test or signing a non-disclosure or non-compete agreement. Include a full contract provision stating that the letter is the only and last offer of employment and surpasses all other communication.
- Make the letter easier to read by including information that will reassure and orient the candidate to the company. Finish the contract letter by including a spot for the employee’s signature and the date.