What separates an offer letter from a contract?

On Behalf of | Oct 14, 2021 | Employment Law -- Employer |

When an employee gets an offer letter that discusses the possibility of a specific term of employment, they may face legal action if they cut the term short. But are they in the wrong, or is the employee incorrect?

Offer letters differ from contracts in many ways – most importantly, in legal ways. An offer letter cannot and does not guarantee anything, which is important for employees to keep in mind when deciding whether or not to take action.

Offer letter vs. contract

HR Dive looks into employment laws in Pennsylvania. An employer can terminate any employee at any time under the laws of the state. On top of that, offer letters do not guarantee employees certain positions at the company, certain rates of pay, or certain lengths of employment. An offer letter will generally outline things an employee can expect, and will often mention projected terms of employment.

But an offer letter is not a contract. An offer letter may mention salary, benefits, potential start date and more. But they do not legally bind an employer in the same way that a contract does, and if they do not follow through on the wishes stated in the offer letter, a court will likely not determine them liable.

Avoiding liability

However, experts suggest that companies avoid wording their offer letters in a way that makes things seem guaranteed when that is not necessarily the case. This could potentially cause legal troubles for the company later down the road. In such a scenario, it is possible for an employee to hold a company liable.