What is an employment agreement/offer letter?
An employment agreement sets out the terms and conditions of the relationship between an employer and an employee. It states the obligations they have to each other and the benefits they will receive from each other.
- Each agreement should be tailored to suit an individual employment relationship.
- Employment agreements do not necessarily need to repeat terms and conditions set out in the ASO’s policies, however the offer letter should reference that they are subject to the HR policies and procedures in place.
- Employment agreements may need to be more detailed if policies are not in place or if the particular position has specific requirements. For example, overtime rules may be specific to the position, the job may be unionized, or the employee may have access to confidential information because of the work performed.
Letters of offer initiate and bind new hires to the employment contract. Offer letters should be reviewed annually to ensure the following (may vary depending on the job):
- Position title
- Start date, end date (if a temporary contract)
- Reporting relationship
- Wage rate
- Hours of work
- Vacation time or vacation pay
- Job location
- Compliance to organizational policies. By stating that there are rules and regulations in the offer, you bind new hires to these policies without having to list each one individually.
- Reference to the position description
- Specify any required conditions such as reference checks, education verification, completion of courses/training etc.
- Terms for ending the contract
- Do not promise things that you cannot guarantee such as future promotional opportunities or increased benefits.
- Stating the supervisor’s name, or at least the reporting relationship.
- Confirm only the starting salary. Do not promise or allude to future pay changes.
- State any conditions that will affect the employment, such as probation, proprietary information and any restrictive covenants involved. An organization has the right to make any lawful condition of employment.
- If there is a probation period, mention it.
- If the employee will be restricted in the type of work he or she can carry out after termination, make sure to mention it in the letter of offer. If there is any confidential information that must not be used externally, let the candidate know.
- Require the candidate to respond to the offer by a specific date. Close the offer legally by stating an expiry date. Avoid open-ended letters of offer as some applicants accept months after the recruiter has hired someone else.
- Consider unfunded liabilities. Permitting employees to accrue, bank and carry-over paid time (e.g., overtime, lieu time, vacation) can create unfunded liabilities in future for the organization. It’s important that employment contracts (and agency policy for that matter) include strict rules outlining how paid time can be accrued, banked or carried over from one year to the next.
It’s also important to indicate that prior approval is always required so there are no surprises or false expectations from employees!
Sample Offer Letter A template to get you started. It covers the key aspects of an employment contract in a Word document so that you can customize it according to your policies and practices. For your convenience, prepare a standard contract to use with all employees and tailor it for specific jobs by filling in blank spaces or attaching pages that cover the details.
We recommend having strongly worded provisions outlining termination in the event you terminate not for cause. It’s recommended that ESA provisions are followed but if some other agreement is reached its important to document this and make sure it’s agreed to in writing prior to an employee commencing work.
Offer Letter Checklist A template to make sure your offer letter covers off the critical components! Take a look at your offer letter templates. It is recommended that your master templates be reviewed by your employment counsel.