When you receive a job offer, you may be given both a contract of employment and an offer letter. While some people may assume that these two documents are the same thing, they actually serve different purposes. In this article, we’ll dive into the differences between a contract of employment and an offer letter and what you need to know about each.
What is an offer letter?
An offer letter is a formal document that an employer sends to a potential employee to offer them a job. The letter usually includes the title of the position, the start date, the salary, and any benefits that will be provided. It’s important to note that an offer letter is not a legally binding agreement and can be revoked by the employer at any time.
While an offer letter is not legally binding, it does set expectations between the employer and the potential employee. The offer letter can be used to negotiate the terms of the job, such as the salary offered or start date. Once the terms are agreed upon, the offer letter serves as a point of reference for both the employer and employee.
What is a contract of employment?
A contract of employment is a legally binding agreement between an employer and an employee. The contract outlines the terms and conditions of the employment relationship, including the job duties, hours of work, compensation, benefits, and termination policies. Once signed, the contract is enforceable by law and can be used in court if there is a dispute between the employer and employee.
A contract of employment can be offered at any time during the employment relationship, not just at the beginning. For example, an employee may negotiate a new contract with their employer if they receive a promotion or change in job duties.
What are the differences between an offer letter and a contract of employment?
The main difference between an offer letter and a contract of employment is that an offer letter is not legally binding and can be revoked by the employer. A contract of employment, on the other hand, is a legal agreement that sets out the rights and responsibilities of both the employer and employee.
Another important difference is that an offer letter is usually shorter and less detailed than a contract of employment. While an offer letter only outlines the basic terms of the job, a contract of employment includes more detailed information about the employment relationship, such as the expectations for job performance and the consequences of not meeting those expectations.
Which one should you pay more attention to?
Both an offer letter and a contract of employment are important documents that should be reviewed carefully. The offer letter should be used as a starting point for negotiations and should be agreed upon before signing. While the offer letter is not legally binding, it does set expectations for the employment relationship.
The contract of employment, on the other hand, is a legally binding agreement that outlines the terms and conditions of the employment relationship. It’s important to review the contract carefully to ensure that you understand your rights and responsibilities as an employee.
In conclusion, an offer letter and a contract of employment serve different purposes and should be reviewed carefully. While an offer letter is not legally binding, it does set expectations for the job. A contract of employment is a legally binding agreement that outlines the terms and conditions of the employment relationship. By understanding the differences between these two documents, you can ensure that you are making informed decisions about your employment.