The moment of offering employment is one of the most important in the employment relationship. It is also one of the most poorly utilized by employers.
That instant is particularly significant because it is when the most important contractual terms are established. It is also the best opportunity for the employer to impose the terms on which it wants the relationship based.
From a contractual perspective, in order to be binding on the relationship, the employer's terms must be imposed in exchange for some consideration flowing to the employee. The offer to employ the individual satisfies this legal requirement.
This is why fundamental terms properly imposed at the hiring stage are enforceable. It is also why changes unilaterally imposed after hiring, without additional consideration, are not enforceable. This requirement frequently trips up employers in their attempts to impose new terms on the relationship.
In my view, the best way to make an offer of employment reflecting the full range of desired terms is to deliver an employment contract to the candidate for her signature. A cover letter should accompany the contract asking the individual to review the contract and, if its terms are acceptable, return a signed copy. The individual's signature on the contract demonstrates her acceptance of the terms set out therein.
This must, of course, occur before the individual commences the employment. The contract should, among other things, identify the employee's start date, position, and compensation. It should also incorporate the employer's policy manual (a copy of which should be provided to the employee at the same time) and it should set out a severance formula.
I have never been a fan of the concept of sending the individual a simple offer letter summarizing the terms of the relationship. There are a number of reasons why this is a poor practice.
First, summarized terms in an offer letter almost always differ in some respect from the understanding of at least one of the parties. Often, this is so because the terms are so abbreviated in the offer letter as to be inaccurate.
Second, an offer letter never sets out all of the terms of the relationship. Such letters tend to be brief and are often limited to identifying the position, salary, and benefits. There are many other aspects of the employment relationship needing to be set out in writing. Including a few selected items in an offer letter just doesn't get the job done.
Third, employers who send an offer letter to the individual and then attempt to have him sign a contract later on (after the commencement of the employment) risk the likelihood that the contract will be unenforceable. Unless the employer makes an offer of some new consideration (a pay raise, for instance) then it shouldn't attempt to impose a contract after hiring.
Fourth, employers who are in the habit of using only an offer letter often fail to follow up with the timely signing of a contract. Not using an employment contract at all is, of course, the worst possible result.
The world will not come to an immediate end, of course, if the process of offering employment is lacking to some degree. The common law implies various terms into the relationship to fill some of the resulting voids.
The failure to properly establish the terms of the relationship at the outset will, however, come back to haunt the employer. The most frequent pitfall is the common law obligation to provide reasonable notice of termination (or pay in lieu). An employer failing to impose an enforceable severance formula will be subject to this expensive common law obligation.
As with many aspects of the employment relationship, a little advance planning and organization will make hiring a much more effective process.
These items are intended for general informational purposes only and should not be construed or relied upon as legal advice. The legal issues addressed in these items are subject to changes in the applicable law. You should always seek competent legal advice concerning any specific issues affecting you or your business.
About Robert K. Smithson
Robert’s legal practice is focused exclusively on the areas of labour law and employment law. Robert has a unique background as a labour and employment lawyer. He began as in-house union counsel and later moved on to represent management clients. Recently, he served as Director of Human Resources & Industrial Relations at Western Star Trucks in Kelowna.
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