Key Takeaways:
- Two offer letters need to be sent: the first is from the company to secure the candidate, and the second is from the EOR partner for formal onboarding.
- The EOR partner acts as the legal employer in India, handling compliance, payroll, and other administrative tasks on behalf of the client company.
- The initial offer letter is a formal intent and not legally binding. The employment letter, provided by the EOR partner, holds legal value and formalizes the employment terms.
Lisa, a seasoned HR professional at a growing tech company in the U.S., has just finished a video interview with Raj, a brilliant software developer based in Bangalore. Excited about bringing Raj on board, she’s ready to send him an job offer letter but soon finds herself entangled in a web of questions. Who should send the job offer letter—the company or their India-based Employer of Record (EOR) partner? And how should she present Raj’s salary, ensuring it reflects the total cost to company (CTC) without causing any confusion?
Navigating these nuances can be tricky, especially for companies new to hiring remote talent in India. To help ease this process, we’ve crafted a step-by-step guide that will walk you through creating and sending offer letters with CTC for your remote employees in India. From clarifying responsibilities to breaking down salary components, this guide will ensure you’re well-prepared to make your new hires feel valued and informed from the get-go.
Job Offer Letter & Onboarding Flow for a Remote EOR Employee
The client company (the overseas company that wants to hire the remote employee in India) works with the EOR service provider to identify potential candidates. The client company then directly conducts interviews and selects the candidate they want to hire.
Once a candidate is selected, the client company sends the first offer letter to secure the candidate from applying to other opportunities before the EOR partner can onboard them. Following this, the EOR service provider (Wisemonk) sends out the second offer letter on behalf of the client company:
- First Offer Letter - This initial letter, sent by the client company, states the intent to hire the candidate and outlines key terms like position, compensation, benefits, and expected start date. The candidate needs to sign and return this letter to accept the job offer.
- Second Offer Letter - After the first offer letter is accepted, the EOR provider sends another offer letter that reiterates the job details and serves as a precursor to the formal employment contract.
- Employment Letter - After the second offer is accepted, the EOR provider prepares a more detailed employment agreement. This includes all the terms and conditions of employment and specifies the project/work the employee will be doing for the client company. It is signed between the EOR provider and the employee.
In a remote EOR setup, the EOR is the official employer of record for tax and compliance purposes, while the client company manages the employee's day-to-day work. However, the job offer letter and employment contract make it clear the employee is specifically hired for and will be working on the client company's projects.
After the paperwork is completed, the EOR provider initiates the onboarding process, which typically involves:
- Completing new hire forms and documentation
- Setting up payroll and benefits
- Providing necessary equipment like a laptop, software access, etc.
The EOR service provider sends the official job offer letter and employment contract as the employer of record. But it is done in partnership with the client company, who remains very involved in selecting, onboarding and managing their remote EOR hires.
Offer letter vs Employment Letter in India:
The main differences between an job offer letter and an employment/ appointment letter in India are:
So in essence, the job offer letter is the initial job proposal with basic terms, while the employment letter is the final, legally binding contract detailing all aspects of employment. The candidate can negotiate terms after the offer letter, but the employment letter is usually final once signed by both parties.
When an job offer letter must be given?
An job offer letter should be issued once a company has selected a candidate for a position. Typically, the candidate is expected to join the company within 1-90 days of receiving the offer. This timeframe allows both the employer and the new hire to complete any necessary preparations, such as finalizing notice periods at their current job and organizing relocation if needed.
What salary needs to be mentioned in an offer letter?
Mentioning salary details in an job offer letter is crucial for transparency and setting clear expectations with the candidate. While not legally mandatory in India, including at least the annual CTC (Cost to Company) or broad compensation terms makes the offer more professional and complete. Key salary components to specify are monthly gross pay, basic salary, allowances like HRA, employer's contributions to PF and gratuity, and any variable pay or bonuses. The salary figure can be directly listed in the job offer letter body, shared as a detailed annexure, or conveyed by mentioning take-home pay and deductions. Some companies may only state the CTC without a breakup, verbally discuss salary, or include it later in the employment letter. However, the best practice is to provide a salary breakup in the job offer letter itself or as an attachment. It helps avoid misunderstandings, makes the offer binding, and allows the employee to enforce the compensation commitment if needed.
Job Offer Letter Checklist for India
Other commonly included details:
- Job location
- Contact information
- Contingencies for background checks
- Personal data usage terms
- Health and safety policies
The job offer letter should comprehensively state all-important employment terms while allowing room for further discussion in the subsequent employment letter. A well-drafted offer letter sets expectations and builds a strong foundation for the employer-employee relationship.
Download Your Job Offer Letter Template for India
Click here to download the Job Offer Letter Template tailored for remote hiring in India.
FAQs
1. Can I resend my offer letter?
Yes, you can resend an offer letter if needed. However, make sure to clearly communicate the reason for resending it and highlight any changes made. It's best to avoid making frequent changes to the offer letter as it may create confusion or mistrust with the candidate.
2. What is the usual notice period for candidates in India?
The standard notice period in India varies, but it is usually around 30 to 90 days for senior-level employees and 15 to 45 days for other employees. The exact notice period is determined by the employment contract, company policy, and industry norms.
3. When do I mention my company policies in the offer letter?
It's a good practice to include a reference to the employee handbook and key company policies in the offer letter. You can mention that the candidate is expected to adhere to the company's code of conduct and other relevant policies. The detailed policies can be shared with the employee during the onboarding process.
4. Can I revoke an offer letter?
Yes, an employer can revoke an offer letter, but it must be done carefully and with consideration of legal and ethical implications. Offer letters are typically revoked when the conditions outlined, such as background checks or reference verification, are not met by the candidate or if there are unforeseen changes in the organization's hiring needs.
5. How to revoke an offer letter I sent to a candidate?
To revoke an offer letter:
- Promptly notify the candidate via phone and explain the reasons honestly.
- Follow up with an official withdrawal letter mentioning the specific reasons for revoking the offer.
- Be professional, transparent and empathetic in your communication.
- If the candidate has already accepted the offer, discuss the withdrawal with them and provide a formal notice.
- Consult with legal counsel to ensure compliance with employment laws and contracts.
The key is to handle the revocation process professionally and sensitively, considering the impact on the candidate and the organization's reputation. Having clear conditions in the offer letter and conducting thorough background checks before making the offer can help minimize the need for revocation later.
6. Who is considered an independent contractor under Indian law?
A: An independent contractor in India is an individual who provides services with autonomy and flexibility, is hired on a project basis, and is responsible for their own taxes and benefits. Learn more: Who is an Independent Contractor as per Indian Law?
7. What is the importance of an independent contractor agreement in India?
A: An independent contractor agreement in India is crucial for defining roles, protecting interests, and ensuring compliance with local labor laws and regulations. Find out more: Independent Contractor Agreement in India
8. What is a PEO in India?
A: A Professional Employer Organization (PEO) in India is a third-party service provider that helps companies manage HR functions, such as payroll, benefits, and compliance. Discover more: What is a PEO in India 2024?
9. What should be included in an employee onboarding checklist for hiring in India?
A: An employee onboarding checklist for hiring in India should cover essential steps like documentation, orientation, training, and compliance with local labor laws. Get the details: Employee Onboarding Checklist 2024: Hire in India
10. What is the definition of an Employer of Record (EOR)?
A: An Employer of Record (EOR) is a third-party organization that acts as the legal employer for a company's workforce, handling payroll, taxes, benefits, and compliance. Learn more: Employer of Record Definition
11. What is the onboarding process with an EOR in India?
A: The onboarding process with an EOR in India typically involves documentation, background checks, employment contracts, and orientation, all handled by the EOR. Find out more: Onboarding Process with EOR in India
12. What is the difference between contractors and employees in India?
A: The main differences between contractors and employees in India lie in the nature of the working relationship, tax implications, and legal obligations for both parties. Learn more: Know the Difference Between Contractors vs Employees in 2024
13. What are the costs of employment in India?
A: The costs of employment in India include salaries, benefits, taxes, and compliance costs, which can vary based on factors like industry, location, and company size. Discover more: Cost of Employment in India 2024
14. How can I calculate the Cost to Company (CTC) for an employee in India?
A: The Cost to Company (CTC) for an employee in India includes salary, benefits, and other employer-paid costs, which can be calculated using a CTC calculator. Find out how: Cost to Company Calculator 2024
15. What is a take-home salary calculator, and how does it work?
A: A take-home salary calculator helps employees in India estimate their net pay after deductions like taxes, provident fund, and other contributions. Learn more: Take Home Salary Calculator 2024
16. What are the options for comprehensive health insurance in India for remote teams?
A: Comprehensive health insurance options for remote teams in India include group health insurance plans, top-up plans, and specialized coverage for remote workers. Explore further: Comprehensive Health Insurance in India for Remote Teams 2024
17. How do we go about creating offer letters for remote employees in India?
To create offer letters for remote employees in India, include key details like job title, compensation package, and starting date. Ensure compliance with local laws and coordinate with your EOR partner.
18. What should be included in the job title section of an offer letter?
The job title section of an offer letter should clearly specify the position the employee is being hired for, ensuring there is no ambiguity about their role.
19. Is health insurance typically included in offer letters for remote employees in India?
Yes, health insurance details should be included in offer letters to inform the employee about the coverage and benefits they will receive.
20. Why is it important to detail job duties in an offer letter?
Detailing job duties in an offer letter helps clarify the employee’s responsibilities and expectations, ensuring both parties have a clear understanding of the role.
21. What components should be included in the compensation package of an offer letter?
The compensation package should include salary, bonuses, benefits, and any other financial incentives. It provides a complete picture of the employee’s total remuneration.
22. Why is an offer letter considered a formal document?
An offer letter is considered a formal document because it officially outlines the terms and conditions of employment, setting the foundation for the employment contract.
23. How important is the starting date in an offer letter?
The starting date is crucial as it specifies when the employee is expected to begin work, helping both the employer and employee plan accordingly.
24. What role does the hiring manager play in the offer letter process?
The hiring manager typically oversees the recruitment process, ensures the offer letter accurately reflects the job details, and communicates the offer to the candidate.
25. Should an offer letter specify if the position is for a full time employee?
Yes, the offer letter should specify if the position is for a full time employee to clarify the employment status and expected work hours.
26. What key elements does an offer letter outline?
An offer letter outlines key elements such as the job title, compensation package, job duties, starting date, and other essential employment terms.
27. What is "at will employment" and should it be included in the offer letter?
At will employment" means either the employer or employee can terminate the employment relationship at any time. This clause should be included if applicable to your company’s policy.
28. How should the office location be addressed in an offer letter for a remote employee?
For remote employees, the offer letter should specify the remote nature of the job and mention any expectations regarding visits to the office location, if applicable.
29. How can an offer letter reflect the company culture?
An offer letter can reflect company culture by including a brief description of the company’s values, mission, and work environment, giving the candidate an idea of what to expect.
30. What does "at will basis" mean in an employment context?
"At will basis" means that either the employer or the employee can terminate the employment relationship at any time without cause or notice, depending on local laws.
31. What should be included in a formal job offer letter?
A formal job offer letter should include the job title, job duties, compensation details, starting date, and terms of employment. It should be a comprehensive outline of the job offer.
32. Why are compensation details important in an offer letter?
Compensation details are crucial as they inform the candidate of their salary, bonuses, benefits, and any other financial incentives, ensuring transparency and setting clear expectations.
