Contract Offer Letters: What HRs Get Wrong

HRs in fast-growing companies juggle multiple duties including overseeing the recruitment process for new hires. To send offer contracts or create contract offer templates, most HRs and companies use run-of-the-mill contract templates, downloaded from the internet. It’s easy to make mistakes when editing an 11-page document inundated with crucial legal clauses.

Grammatical mistakes can be dismissed. Errors about terms of employment, compensation, benefits, and privacy policies, amongst others, may have legal implications.

Here are three of the most common errors HRs make when sending offer contract letters to new hires:

1. Not Specifying That An Employment Offer is At-will

The first mistake HRs make is failing to clarify that an employment offer is at-will. In most countries, an employment relationship is at-will, subject to both the decision of the employer and employee to continue the relationship.

This means that a new hire is not legally bound to an organisation for a specific duration. It also means that an employer can terminate an employee’s contract for any reason and at any time.

With At-will clarifications, employees do not feel entitled to promotions or become eager to raise conversations about salary increases. Employees understand that while their employers appreciate optimum performances, they aren’t mandated to reward such with bonuses, increases, or stipends.

At-will offers keep employers from making promises to their employees. You don’t want to feel uncomfortable because you have to let go of an underperforming employee. At-will contract offers define specific terms and conditions of employment.

The terms of employment include clauses such as:

• duration of a probationary period
• Termination notice period
• Contract offer renewal period.

Defined statements in their contracts will keep employees from guessing and give you a legal stand should termination become needful.

2. Unclear Compensation Arrangements

Sometimes, following a topsy-turvy recruitment process, a new hire’s excitement prevents them from exploring their remuneration arrangements. The first paycheck opens their eyes to all hidden errors, including faults with salaries, pensions, and bonuses.

It’s a common mistake among HRs — sending out offers with non-specific compensation details.

Your company’s contract offer should address questions such as:

• How much is an employee’s gross pay?
• What’s the percentage of taxable income?
• How much do they contribute to their pensions? How much does the company contribute?
• Does the company cover health insurance, or is this summed up to their gross earnings?
• Are they entitled to vacation bonuses?

You must provide a breakdown of their annual earnings. Without this, you risk having to field avoidable queries from employees throughout their duration of employment.

3. Bogus Intellectual Property and Confidential Information Policies

The intellectual property clauses are significant to any organisation’s contract template. However, HRs and employers assume that employees do not sift through these clauses for loopholes. These clauses may save you from lawsuits filed by ex-employees with a grudge.

Defining your intellectual property and confidential information policies protects your company’s data, copyrighted information, inventions, designs, and all other trademarks from potential thefts or breaches.

Restrain from stuffing these policies with legal jargon. You can draft concise, detailed intellectual property clauses that align with legal rights without confusing both parties involved in the employment relationship.

Fixing Contract Mistakes

Does your company’s contract offer template cover all bases? Are terms of employment clearly outlined? Are there clauses that leave your company’s data vulnerable to intellectual property violations?

If you aren’t answering yes to these, then Onboardly’s contract offer template is what you need. Our up-to-date template includes clauses on warranties, compensation, intellectual properties, and more.

New to Onboardly? We’ve been waiting for you. Sign up for a 14-day free trial today to start creating new contract offers.