A letter of offer of employment is often the start of employment relationship. It is an important document and needs to be drafted with care to avoid disputes and misunderstanding. Decide if the letter of offer is to be just that or whether it will constitute the contract.

The letter of offer can be used either as a stand-alone document which acts as the contract of employment, or as an initial offer letter, only outlining the basic terms which will be followed up by a fuller written contract. It is critical at the outset to decide which situation you are drafting for, so that the legal status of the offer letter is clear.

If it is to constitute the contract:

• Check that it contains all the terms of the employment (or where appropriate properly incorporates terms eg from a Staff Handbook).
• Check that it complies with the statutory requirements for a written statement of particulars (Article33 of the Employment Rights (NI) Order 1996)
• Consider an ‘entire agreement clause’
• Exclude pre-contract negotiations

If it does not act as the contract it should:

• State it is subject to contract and the contract / written statement will follow
• State that subsequent contract terms will prevail in the event of any contract terms
• Contain enough flexibility to ensure there is no material clash with the later contract.
• Draw any material terms such as restrictive covenants to the attention of the employee so that the employee does not later refuse to sign up to any material clause.
• Set out any conditions – eg reference, right to work (any permits or visas), fitness to work

Whether or not it is intended to constitute the contract of employment it is good practice to require the employee’s signature as it is evidence that the terms have been brought to the employee’s attention, should it be needed later.

Policies

It is not strictly necessary to refer to or include any policies in a letter of offer. Policies are essentially guidelines and advice on the practical workings of the business and the standards expected. However, some policies become inflated over time and encroach on contractual terms and so you should review what you consider to be your main policies and see if any of them in fact amount to terms and conditions – for instance company vehicle policies sometimes define the group of vehicle for employee grades and this potentially forms part of the remuneration package of the employee. A policy setting out differing payments for overtime is also part of the remuneration package and unusual working patterns will fall under the requirement to set out working hours. Such policies may need to be referred to in the letter of offer.

The usual principles of contract apply to employment letters of offer and so once it has been accepted and any conditions fulfilled it may be that any withdrawal of the offer will give rise to a claim by the proposed employee. There can be a contract of employment even if the employment has not yet commenced (Sarker v South Tees Acute Hospitals NHS Trust [1997] ICR 673). Employers need to be particularly careful in situations where withdrawal of an offer is for potentially discriminatory reasons as this can give rise to claims for discrimination even where the employment has not yet commenced.

Whatever your approach, there are useful templates for letters of offer on the ACAS website http://www.acas.org.uk/index.aspx?articleid=1392