Offer Letter, Joining Letter & Appointment Letter: Differences and Important Things to Consider
With the job market becoming more and more competitive, job seekers will be desperate for getting jobs. When the job market is down, the demand for jobs exceeds the supply. So, offered salaries could be on the lower side. It’s pretty obvious to feel ecstatic about receiving a job offer. But, don’t let your brain get overwhelmed. If the proposed salary is way too less than what you deserve or a job position is way below your skillset and qualifications, don’t accept it. That could really hurt your career in the long-term.
There are several things that you should consider before you accept a job offer. In this article, we will cover – what is an offer letter, what is an appointment letter, the differences between an offer letter & appointment letter, and the important things to consider before you sign the appointment letter or employment contract.
If you are yet to arrive at the advanced stage of dealing with the offer letter or appointment letter, feel free to go through the following articles first:
Offer Letter, Joining Letter & Appointment Letter
Differences and Important Things to Consider Before You Sign Appointment Letter
Co-authored by Parinita Gupta
What is an Offer Letter?
An offer letter is basically a document that employers will send to announce a job offer to a particular candidate. When a company decides to hire a job candidate, it often sends an offer letter to let him or her know that they got the position. This letter is usually processed as the next step after the interview process which contains superficial information about the potential position and company’s location and the proposed salary.
Each company formats their letters differently, but the letter generally includes information about the promised position and compensation. It may also include details about other benefits the employee could expect, as well as a start date. The time frame should give the employee time to resign from their current position.
The offer letter will usually state a deadline for the employee to respond to the offer, and if there is no response before that date, the company may choose to hire another applicant instead.
What is the Joining Letter?
A joining letter is a letter from the selected candidate, expressing his willingness to accept the job that has been offered by an organization.
Joining Letter can be referred to as an Acceptance letter by the person who has received the offer. If a person is accepting the offer made by the company, s/he writes an e-mail expressing his interest to take up the position and join the company. It is suggested to write the email irrespective of whether verbal acceptance is made or not.
A few people (or organizations) also refer to the joining letter as the letter given to the candidates who have received their offer letter already but have been waiting for their joining in the organization. It just mentions the date of joining, joining location, reporting time, necessary documents to be carried, etc.
Yes, sometimes people do get confused between a joining letter and an appointment letter.
What is an Appointment Letter?
The appointment letter is followed after the offer letter if the candidate has confirmed that s/he would like to accept the job and then this appointment letter is given. This letter helps the employee’s new position and the work preparation and also the employment contract between the company and the hired person.
Not all companies issue appointment letters before candidates start employment. Quite often the company issues the appointment letter either after joining or after the probationary period.
However, technically, the appointment letter (or employment contract) should be sent before joining. It’s a legally binding letter prepared by a company to confirm that a position has been offered to an individual and the acceptance of terms and conditions between both parties. But, in India or the US, typically, fresh recruits do not receive both offer letter and appointment letter.
Most companies use a very standard appointment letter format that has pretty standard terms and conditions. Nevertheless, it’s only wise that you read the appointment letter carefully and look for vague and/or unfavorable clauses that can create problems for you later.
Important Things to Consider Before You Sign the Appointment Letter
Most of us, at some point in our lives, have had to or will have to sign an appointment letter for some job or the other. We may sign these letters in hurry considering how excited we get to accept a job but there are a number of things to consider before signing these as they may have some pitfalls and traps that you may not know of.
Once you get an offer letter from a company (not to be mistaken with an appointment letter), you should check the basic information such as your designation and salary details, and period of the probation period.
Once you are done with the aforementioned probation period, the company offers you an appointment letter (in some cases where you have no probation period, the company directly offers you the appointment letter), which has some clauses, policies of the company, your cost to company (CTC) and other tits and bits. Here are the top 8 things to consider before you sign the appointment letter – either before you start your job or after the end of your probationary period.
1. Job Designation, Role, and Description
You must check the role that you have been hired for and make sure that they are offering you the position that you interviewed for. Apart from that, also make sure that you check what your duties are, you may go hoping to do something exciting and end up serving coffee to everyone all day.
During the interview, the employer may see you as a better fit for some other job role and change your job roles and designation as per their desires in your appointment letter without really informing you, so make sure you go through that section of your appointment letter.
2. Appointment Period
All appointment letters usually have a starting date. However, if you’re joining for a fixed amount of time then it should be clearly mentioned and so should the time period that you’re joining for, with the joining and leaving dates, along with the clauses, which could be exercised if either party is to terminate the tenure before the decided upon time period.
You should also read carefully about the notice period. As a standard, most companies write down 90-day notice period. But, more often than not, you can negotiate that by speaking with your manager. But, it’s better that you do consider this before you sign the employment contract to avoid a penalty while resigning.
Checking these dates and time periods with the clauses for early termination is very important if you were to get another job offer that you really like and want to terminate the previous one earlier than the agreed-upon term.
3. Working Hours, Leaves, and Holidays
This may sound unethical to many out there but discussing and knowing about your working hours/ leaves/ holidays is very important as this is what helps a person maintain their work-life balance. Going through this part of your appointment letter is very important so you know what you are getting into and make future plans accordingly. Make sure you know about their vacation, leave policies, etc.
In one of my previous employments, I was told (verbally) that the job is going to be a 5-day working (Monday – Friday). I also agreed on the salary considering it’s a 5-day a week job.
After joining, the CEO told me that the company follows a 6-day working policy (not even half-day on Saturdays or work from home). My boss clearly denied that we had agreed upon 5-day working. It happened within the first week after I join.
The same organization had also mentioned that I will be entitled to 25 days of annual leaves (it was mentioned on the appoitment letter). But, it was not mentioned how the calendar year going to be counted. Few companies mantain April – May calendar year and few companies maintain January – December calendar year. Due to my own ignorance, I actually lost almost 10 days of leaves.
But, don’t feel that all companies are the same. During my first job (in the UK), I had started in January and it was initially a one-year contract (academic jobs at the initial stage of your career are like that only). But, the HR policies were that irrespective of the starting date, leaves will be calculated from Oct – Sep (the academic calendar).
When I was resigning (had an offer for a new job in the Netherlands), there was an issue with my leaves. But, my reporting manager sorted it out and explained my nature of employment. So, the bottomline is, irrespective of clauses, do speak up with your reporting manager. Communication and transparency are extremely critical.
4. Office Location and Relocation Clause
You may want to go through this section of your appointment letter carefully, or they may send you to work on a different location that is maybe 4 hours away from your current place, and you can’t say anything because you signed up for it!
Usually, the office location is the same as the place where you were interviewed but sometimes company’s work location is different from their interview location, and let’s say if you were to sign the appointment letter without going through this clause, you might have to drive 4 hours to get to your new workplace.
5. CTC, Perks, Benefits, and Superannuation (Increment) Policies
This is one of the most crucial parts that most of us tend to overlook. There are several perks and benefits involved when you take up a job, like insurance, medical benefits, bonuses, and other perks such as access to a private pool/ gymnasium and even yearly tickets to amusement parks, etc.
Mostly, people tend to overlook these minor details about the perks and benefits of working in a certain company, thereby missing out on them. The HR person or manager won’t necessarily come to you asking you to claim them, you have to do it on your own, Claiming your bonuses/ insurance, etc.
Now, all of this includes in your CTC, i.e Cost to company. Which also includes your gross salary, i.e the salary that you will be getting in-hand.
So before you sign that offer letter make sure to go through your entire CTC structure which includes all of that and you know what to claim beforehand.
“Regarding bonuses, employers do not always consider offer letters to be employment contracts (especially when the letters state that you are an “at-will” employee), but these letters can give you some contractual rights. For example, if the offer letter states that you will get a guaranteed bonus of a specific amount and the employer doesn’t pay it, you can bring a claim for breach of contract.”
Please be advised that bonuses could be guaranteed or discreationary. Few companies do offer joining bonus as well. Additionally, do not confuse bonus with incentives. Incentives are performance-based.
6. Exclusivity / Non-Compete Clause
If you want to work for some other company as well simultaneously, then you may want to go through their exclusivity clause. The majority of companies do not want you to work other jobs simultaneously as they believe that it may affect your work efficiency. They want your full, undivided attention and don’t want you to hinder the efficiency of the work.
However, sometimes they may allow you to work for some other job unless they are the company’s direct competitor, working with the company’s direct competitor however is a big “no” regardless. It’s not only going to be illegal once you sign the appointment letter but, it is also going to be very unethical in the standards of professionalism so before signing your appointment letter you may want to check that clause out.
In today’s age of gig economy, there are a few organizations that can allow you freelancing opportunities. In fact, I know a few companies that do encourage (maybe not directly) to get involved in part-time engagements – of course, non-competing ones and provided the side project don’t hamper the employee’s productivity. However, do check with your supervisor or reporting manager.
Personally, I am also a supporter of this concept (especially for startups) as it does help the employees to learn new skills, perform, and grow. I have encouraged my junior colleagues to opt for side gigs in two organizations and I found them to be performing better in their roles after they started to get involved in freelancing projects. Besides, during the current scenario, if someone is joining with a lesser salary package, a side gig could be very helpful.
Read the following articles:
7. Non-Disclosure Agreement
No company would want you to go around telling everyone the company’s information and other trade secrets etc., especially not to their competitor, so most of the times companies include this non-disclosure agreement in your appointment letter, this non-disclosure agreement starts from the time you join the company to maybe a few months or even year(s) after you leave the company.
Violation of this agreement will not only hinder your reputation, CV, etc.. But, you may also have to compensate the company with a certain amount of money. This agreement mentions what kind of information about the company you can and cannot disclose to anyone, you should not disclose the company’s information nevertheless, however you should go through this agreement once before you sign the dotted lines.
8. Research Ownership, IP & Patent Policies
Companies usually include this clause in their appoint letters where it’s mentioned that whatever work you do during the tenure of your appointed period by the company, would be owned by the company and not you. You may get the credits for the work but the ownership of your work would belong to the company.
So before writing a 50-page research paper with 20 theses or maybe inventing something to change the world, you may want to make sure that that it won’t be owned by the company (unless you want the company to own it). And to make sure that does not happen, just go through this clause in your appointment letter, and maybe negotiate with the company if required and that’s all. You will be good to go!
About Parinita Gupta: Parinita is a full-time banking professional. Additionally, she is also a passionate blogger and digital marketer.
She mostly writes about the Banking & Finance, Technology, and FinTech sector. But, she also enjoys writing on other topics as well. You can follow her on Twitter.
Featured Image Source: The Balance Careers
Author: Tanmoy Ray
I am a Career Adviser & MS Admission Consultant. Additionally, I also manage online marketing at Stoodnt. I did my Masters from the UK (Aston University) and have worked at the University of Oxford (UK), Utrecht University (Netherlands), University of New South Wales (Australia) and MeetUniversity (India).
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