Offer letter vs appointment letter: what each one does
An offer letter is a short signed statement that a selected candidate is wanted: the position, work location, reporting line, proposed joining date, CTC and the conditions attached, such as background verification and medical fitness.
It is deliberately not the contract; probation, working hours, leave, notice period and termination come in the appointment letter issued on or before joining, or in a fuller employment agreement for a senior hire.
None of the three needs stamp paper, registration or a notary in Punjab or Chandigarh.
Checked on against our Offer Letter, Appointment Letter and Employment Agreement pages and their notes, which state the formalities for Punjab and Chandigarh. Those pages state no notice period and no provident fund or ESI rate, because those depend on the law that applies to the establishment; check the current rules for yours. Guide updated .
What does an offer letter say?
A candidate has been selected and needs the offer in writing before resigning or fixing a joining date. The letter puts the main terms on paper and asks for a signed copy back by a stated date. Our free offer letter asks for:
- The position offered, the department and the reporting manager
- The work location, and the nature of the engagement offered
- The probationary period in months, if the role has one
- The proposed date of joining
- The annual cost to the company (CTC), and optionally how it breaks up
- Whether the offer is conditional on background verification, and on medical fitness
- The date by which the candidate must accept
The break-up is optional. The form’s own example reads: basic Rs 4,00,000; HRA Rs 2,00,000; special allowance Rs 2,60,000; retiral benefits Rs 1,00,000. That is an illustration of the layout, not a figure to copy.
What is the difference between an offer letter, an appointment letter and an employment agreement?
| Paper | What it is | Use it when |
|---|---|---|
| Offer letter | A short statement of intent. It records the principal terms and asks for a signed acceptance, and is not by itself the complete contract of employment. | A candidate is selected and wants the offer in writing first |
| Appointment letter | The governing document: designation, reporting line, compensation, probation, working hours, leave, statutory benefits, confidentiality and the notice period on either side. The employee countersigns it. | The terms are settled; issued on or before the date of joining |
| Employment agreement | A formally signed two-party contract, executed before two witnesses, covering the same ground as the appointment letter. | A senior, specialist or fixed-term hire where the company wants a signed contract on file |
For most ordinary hires, an offer letter followed by an appointment letter is the usual and sufficient route. The employment agreement is for the hire where the company wants a signed contract rather than a letter the employee only countersigns. Clause 8 of the offer letter says as much: it is not a complete contract, and an appointment letter follows on or before joining.
Who should sign an offer letter, and how does the candidate accept?
The letter goes on the company’s letterhead over the signature of whoever is actually authorised to make offers, such as the proprietor, a partner, a director, or an HR head or manager acting under a board resolution, an authority letter or the authority of their position. An offer signed by someone without that authority does not bind the company, and a candidate who resigns on the strength of it has a grievance against whoever signed, not a job.
The candidate accepts by signing and returning a copy by the stated date, and the offer lapses without further notice if the company does not receive it. Keep the signed copy on file before you treat the offer as accepted: a verbal or emailed “yes” is not what the letter asks for. Under section 4 of the Indian Contract Act, 1872 acceptance need only be communicated, and the signature on the returned copy records that.
Does an offer letter or appointment letter need stamp paper or registration?
No stamp paper. An offer letter records an intention to employ, not a concluded contract of service, and the Indian Stamp Act, 1899 does not charge it with duty in Punjab or Chandigarh. An appointment letter is a contract of personal service, which that Act does not charge with ad valorem duty under its general “Agreement” entries, so plain paper is enough in both places. Print both on the company’s letterhead. The employment agreement, also a contract of personal service, can likewise be executed on plain paper.
None of the three is registrable. Section 17 of the Registration Act, 1908 reaches instruments that create or transfer an interest in immovable property, or specific instruments such as leases, and a contract of employment is neither. No notary is needed for any of the three. The two letters need no witnesses; the employment agreement is drafted for two witnesses as good practice, not because the law requires it.
What should an employer check before issuing the letters?
- That the CTC is on the same basis, annual, gross and cost to company, that payroll uses. A mismatch with the appointment letter or first payslip is a common source of a new joiner’s grievance; see our salary slip guide.
- Whether the conditions, background verification and medical fitness, need a stated consequence, such as withdrawing the offer before joining.
- Whether the company’s duties under the Punjab Shops and Commercial Establishments Act, 1958, as it applies in Punjab and as extended to Chandigarh, including any register of employees, start from the offer or only from actual joining.
- Whether the employee is likely to be a “workman” under the Industrial Disputes Act, 1947. That turns on actual duties, not the designation printed in the letter, and it brings its own notice, retrenchment compensation and disciplinary procedure.
When an employee later leaves, see our resignation letter guide for what they do with the notice clause you set here.
Questions people ask
Does an offer letter or appointment letter need to be on stamp paper?
No. In Punjab and Chandigarh an offer letter records an intention to employ and an appointment letter is a contract of personal service, and neither is an instrument the Indian Stamp Act, 1899 charges with duty under its general agreement entries. Plain paper on the company’s letterhead is enough, and neither is registrable.
How does a candidate accept an offer letter?
By signing and returning a copy by the date stated in the letter. If the company does not receive it by then, the offer lapses without further notice. The company should keep the signed copy on file before treating the offer as accepted; a verbal or emailed “yes” is not what the letter asks for.
When should we use an employment agreement instead of an offer letter and appointment letter?
For most ordinary hires, an offer letter followed by an appointment letter is the usual and sufficient route. The fuller employment agreement is meant for a senior, specialist or fixed-term hire where the company specifically wants a signed contract, executed before witnesses, rather than a letter the employee only countersigns.
Can an employment agreement stop an employee from joining a competitor after they leave?
No, and our agreement does not attempt to. Section 27 of the Indian Contract Act, 1872 voids a restraint on a person taking up lawful employment or business after the agreement ends, outside narrow exceptions that do not reach an ordinary employment relationship. What it offers instead is a confidentiality duty that continues after employment, and a narrower, time-bound restriction on soliciting the company’s staff and clients.
Is the employee entitled to provident fund, ESI and gratuity?
Where the company and the employee’s pay meet the coverage thresholds those Acts prescribe: provident fund under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, insurance under the Employees’ State Insurance Act, 1948, and gratuity under the Payment of Gratuity Act, 1972 once the qualifying service is completed. The agreement records the entitlement; it does not change the thresholds those statutes fix.
This guide explains the rules as our document pages state them. It is not legal advice about your own situation; for that, speak to somebody who has heard your facts.