Contract vs Offer


Offer letters differ from work contracts in several ways, although by their very nature they can cause confusion. While an offer letter is generally used as an instrument to communicate to employees the conditions of their salary, benefits and responsibilities, an employment contract is a binding agreement between the employer and the employee. Many employers are reluctant to give employment contracts for fear that they invalidate the "discretionary" nature of employment. Offer letters are usually written to avoid this problem.

Hiring "at will"

A hiring "at will" means that hiring a worker is only for as long as they both agree. This allows companies to fire employees for any legal reason, and employees to resign at will. Most states in the United States recognize "at will" contracting and in some states, it is assumed by default and can only be modified by special language within a contract.

Job Offer letters

An offer letter is a short letter that often indicates the description of the task for which an employee has been hired, as well as important topics such as salary, benefits and responsibilities. Usually, this letter is sent to a new employee to confirm what the employer is offering. However, offer letters that refer to "annual wages" or "bonuses" can be interpreted by an employee as a promise of a certain period of employment, for example, "You will be here for one year and receive a X amount for your services. " Since many companies are reluctant to hire employees for a certain period of time, and therefore abandon their ability to dispense with that employee at will.

Employment contracts

An employment contract can be a very useful tool for both parties. Authorizes the employer to explain specifically what he expects, as well as the way in which benefits, vacation pay and salary increases are determined. It also offers an employee proof of what he has been promised in the face of future changes, such as the transfer of the manager who hired him, or a lack of compliance with the agreement by the employer. If there is a disagreement between the employer and the employee, a contract can avoid litigation and make the conflict a much simpler matter of contract law. Many employers in the United States avoid employment contracts, due to the misconception that they deny the "discretionary" nature of employment.


Offer letters may be misinterpreted as contracts by the language they use, or by the employer's requirement that the employee sign the offer letter and return it. However, an offer letter creates, to some extent, an agreement between the employer and the employee. It must promise only what it directly affirms. Some offer letters are nonspecific and language can be seen as an implicit agreement. An employment contract is often much more specific, indicating the exact terms between the employee and the employer, because due to this specificity, a contract that establishes the "discretionary" nature of employment is less open to interpretation.

Share on Facebook Share on Twitter Share on LinkedIn
Back to top
Terminology »

Home | About Us | Contact | Privacy Policy

Copyright 2011 - 2020 - All Rights Reserved