Background information: A lawsuit caused by an offer letter
Our client was planning to expand it’s business after CNY. They interviewed and sent out offer letters to qualified applicants. In the offer letters, they specified all terms related to the positions, such as salary, probation, social security and on-board date. However, after CNY, they had to give up their expansion plan due to some unexpected circumstances and had to “revoke” the offer letters. They called me and asked, if they could.
Then, what does the law say about the offer letter?
There is no clear specification in labor law about the nature and validity of an offer letter. According to the Contract Law of PRC, an offer letter with specific terms is an “offer”, such an offer can only be revoked before the offeree confirms their acceptance. Otherwise, the offer letter is binding to both parties.
So, though the labor law doesn’t specify anything particular, the employer still has to be careful.
Quick Tips:
1. Do Not issue an offer letter until you have made the final decision.
Employers should issue an offer letter, only after they have decided to hire the employee, and remember that they can’t change the content of it unilaterally once it’s been sent out.
2. Leave yourself some wiggle room
Employers should specify situations under which they could choose not to hire the applicant; or specify a deadline for the applicant to confirm their acceptance. If the applicant can’t give their confirmation before the deadline, the employer could then cancel the offer.
3. Ask for a medical examination report before sending out the offer letter
Some employers’ recruitment process is like this: they send out an offer letter and ask the applicant to bring a medical examination report on the on-boarding day, among other papers, such as their graduation certificate. In our opinion, it’s better to ask applicants to send in their medical examination reports before issuing any offer letters. This way, the employer has a chance to make a final decision based on the result of the medical examination and avoid any labor dispute caused by claimed or suspected employment discrimination.
4. Remember: an offer letter is not a labor contract
An offer letter only indicates intention of the employer to hire the applicant, but it’s not an official contract. Employers should sign a labor contract with the employee within one month of the on-board date and, specify that:
1) the labor contract will supersede any mutual agreements between both parties or;
2) in the event of any inconsistency between the labor contract and offer letter, the terms of the labor contract shall prevail.
Anything else?
