Difference Between Offer Letter And Appointment Letter

Getting a new job is very exciting. However, the paperwork in the beginning can be all the more confusing with an Offer Letter and an Appointment Letter. Both have an impact on a candidate's future, these two are nevertheless viewed very differently as per Indian labour regulations.

This article will dissect the differences between these crucial employment documents, highlighting their significance and the key information they typically contain, referencing relevant acts and sections where applicable.

Offer Letter

The Offer Letter is usually the first formal document sent to prospective employees once they have satisfactorily passed through the interview process. By this document, a formal invitation to join the organization is extended, together with important employment terms and conditions. Consider this as an informal agreement, a precursor to the formal employment contract.

Key Aspects of An Offer Letter

• Expression of Intent: One of the primary functions of offer letters is to set out formally the conditions under which the employer intends to hire the candidate.
• Basic Terms of Employment: An offer letter typically provides key details of the job being offered. It mentions the job title and designation, which defines your role clearly. The letter mentions the department or place of work, along with the tentative joining date. It contains information on the salary package, such as the basic pay, allowances, and extra benefits like health insurance, provident fund, and gratuity according to the Payment of Gratuity Act, 1972. Lastly, it mentions the working hours normally expected of you and the probation period during which your performance will be judged.
• Conditions Precedent: An offer letter will specify certain conditions that must be met prior to confirming an employment offer. These conditions can include successful background checks, passing of a pre-employment medical examination, and submission of such key documents as educational certificates and identity/address proof. These requirements must be satisfied for the commencement of the onboarding process.
• Validity of the Offer: The ultimate acceptance of the offer is explicitly addressed for the candidate in the offer letter, specifying the deadline by which the offer must be accepted.

Appointment Letter

The appointment letter, also known as the joining letter or employment contract, is issued after the candidate has accepted the offer letter and fulfilled all conditions precedent. This letter serves as the formal confirmation of employment, along with a legally binding contract outlining the employer-employee relationship.

Key Aspects of an Appointment Letter

• Formal Confirmation of Employment: It clearly states that the candidate has been formally appointed to the specified role.
• Detailed Terms and Conditions: The appointment letter is an elaboration of the offer letter, which details information pertinent to the employment relationship. It mentions matters such as job responsibilities, reporting structure, leave policies, and termination clauses-widely in sync with the labor laws such as the Factories Act, 1948, and Industrial Disputes Act, 1947. It deals with confidentiality obligations, intellectual property, the company's code of conduct, and the governing law applicable to the role. Finally, it is signed by the parties, making it an accepted document between the employer and employee.
• Legally Binding Contract: The Appointment Letter, once signed by both parties, constitutes a formal and legally binding employment contract under the Indian Contract Act, 1872.

Difference Between Offer Letter And Appointment Letter

Conclusion

In India, it is essential for every employee to understand the difference between an Offer Letter and an Appointment Letter. The Offer Letter is the first stage towards employment and outlines the primary terms, while the Appointment Letter formally creates the relationship through a comprehensive and legally binding contract.

FAQs

A few FAQs are:

Q1. What is an Offer Letter?

An Offer Letter is the initial document expressing an employer's intent to hire, outlining basic job terms and conditions.

Q2. What is an Appointment Letter?

An Appointment Letter is the formal confirmation of employment, detailing comprehensive terms and conditions of the job.

Q3. When do you receive an Offer Letter?

You typically receive an Offer Letter after initial selection but before formally joining the company.

Q4. When do you receive an Appointment Letter?

You receive an Appointment Letter upon or shortly after joining, confirming your employment.