The general purpose and reason why companies send out offer letters is to offer a position to a candidate and to spell out the details of the position. Offer letters are also used to identify start dates, benefits packages, employee expectations and compensation package.
While some smaller companies rely on verbal job offers, larger companies almost exclusively use offer letters in order to mitigate any potential legal issues with job offers. For example, imagine if a company verbally offered someone a position which was accepted by the candidate. The candidate was then told that he needed to pass a drug test in order to secure the position. However, no details were spelled out about the what steps needed to be completed prior to the start date and the candidate started prior to getting the drug test results back. It turns out that the candidate turned employee tested positive for opiates but when told by the company that his employment would be terminated, the employee has the ability to legally challenge the termination since nothing was ever put in writing about the fact that a "clean drug test" was a requirement of employment.
While the formatting and details of offer letters vary quite a bit, the Introduction section of offer letters usually provide very basic information and identifications.
Expect to see something like the following in your offer letter:
XYZ Corporation is pleased to offer John Q Public, the position of Account Executive in our New York City location.
The next section should include critical details about the offered position. These details should include salary, benefits, position title and general responsibilities. A typical letter looks like this example:
The starting salary for the Account Executive position is $40,000 USD. In addition to this base salary, you will have the potential to earn additional income through the sales compensation program. The corresponding compensation plan is attached or can be obtained from the hiring manager, John Doe. As a full-time employee of XYZ Corporation, you will be eligible to receive health care benefits after 60 days of employment. We offer several options for health care and details which cover our available plans will be made available to you on your first day of employment.As an Account Executive for XYZ Corporation, you will be responsible for a annual revenue quota of $500,000 as well as updating pertinent customer information into our Customer Records Database.
Start Date and Conditions
You should fully expect that there will be conditions that you must meet before becoming an employee. Typical conditions include a background check, drug screening and possibly a medical clearance for certain types of jobs.
Be certain not to glance over this part of the offer letter as many do. Make sure that the start date is what you expected and if you have any events in your past that may cause red flags, be sure to address them when you reply to the offer letter.
If all looks and feels right in the offer letter, your next task is to simply reply to the employer with your decision. Part of your reply may be to point out some areas of concern that you may have with the details of the offer letter. If there is an issue that is truly concerning, like the starting salary is lower than expected, do not accept the offer until a new offer letter is sent to you. It may be hard to put a decision on hold until things are cleared up but you'll be better off in the long run by doing so.