5 Reasons to Start Giving Your New Hires Offer Letters (if you don’t already)

August 16, 2015, by HR à la carte | Work Environment and Policies

Rarely do we enter into any type of new relationship anticipating that something will go wrong.  The same holds true for employment relationships.  But we all know that relationships do go sour for various reasons and it is important that employers anticipate this and provide a safety net for their employment relationships.  One of the simplest ways of doing this is through ensuring each new hire receives an offer letter or employment contract.  Here are 5 reasons why you need to start using offer letters today!

1.  Limit your liability

Ensure your offer letter clearly states what the employee can expect in the way of termination/severance pay when the employment relationship ends.  Ensure that in no way are you offering below the minimum requirements for termination/severance pay as per your province’s employment standards otherwise the termination clause will be null and void.

2.  Clearly outline the conditions of employment

If you expect your employees to abide by your company’s confidentiality and non-disclosure agreements, ensure you provide these at the time of the offer letter.  Otherwise don’t be surprised if you find your employees are not legally bound by these agreements when you thought they were.  Your written offer of employment provides the legal consideration necessary to ensure the agreements they sign are legally binding.

In addition, if there are other conditions of employment, such as successfully completing a pre-employment investigation into their background and proof of their legal authorization to work in Canada, and abiding by company policies, be sure to include these in the written offer. 

3.  Set expectations

Let’s be clear.  The employment relationship is an exchange.  In return for you providing the employee with a pay cheque, you are expecting certain things from the employee.  By clearly outlining what those certain things are in the offer letter, it leaves little room for doubt if and when a dispute arises.  By setting those expectations up front and in writing, employees are less likely to play the ignorance card. 

4.  Verbal agreements can be misconstrued

You and your employee have a very different version of the verbal offer.  Which one is correct?  For example, you expect your employee to work Monday to Friday from 8:30 a.m. to 5 p.m. with a work week of 40 hours not including 30 minutes unpaid for a lunch break.  Your employee thinks that their work week is 40 hours including 30 minutes for a paid lunch break so thinks they can leave at 4:30 p.m.  Who is right? Unless it is in writing, it can be misconstrued or misinterpreted.  Ensure your employee knows what they are signing up for and that you know what you are agreeing to by dotting all your i’s and crossing your t’s with a written agreement.

5.  A written agreement will help your HR professional advise you

In the event of any type of disagreement, dispute, or even to understand better the terms of a particular employment arrangement, the first thing your HR advisor will ask for is a copy of the offer letter.  This helps orient them to the situation and helps them to provide more accurate advice.  For instance, your employee disputes the amount of vacation days for which they are eligible.  You say 2 weeks, they say you verbally agreed to 3 weeks; who is right?  Or your hourly employee believes they are entitled to overtime pay since they have been regularly working 42 hours a week even though you initially agreed their work week was 37.5 hours a week.  What do you do?  There are hundreds of examples we could share where the answer would be clear if an offer letter had been in place to begin with. 

To save yourself the future trouble, time and expense of dealing with employee questions and possibly incorrect ideas about their employment relationship with your company, ensure you provide your new hires with offer letters.  If you don’t outline your expectations in writing, chances are your employees will not ask you for clarification but rather from alternate sources such as the Ministry of Labour or their friendly neighbourhood employment lawyer.