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What is an Offer Letter?

An Offer Letter formalizes your company's intention to hire someone by spelling out the key terms of employment. In Malaysia, it's often the first official document exchanged between employer and employee, outlining essential details like salary, position, start date, and basic working conditions.

While not as detailed as a full employment contract, this document creates legal obligations under Malaysian employment law once both parties sign it. Companies typically issue Offer Letters after successful interviews, giving candidates the chance to review and accept the basic terms before proceeding with more comprehensive employment agreements aligned with the Employment Act 1955.

When should you use an Offer Letter?

Issue an Offer Letter immediately after selecting your preferred candidate and before they start work. This timing gives both parties a clear understanding of the employment terms while the details are fresh from interviews and negotiations. In Malaysia's competitive job market, prompt Offer Letters help secure top talent before they accept positions elsewhere.

Malaysian employers need these letters when hiring both local and foreign workers, ensuring compliance with the Employment Act 1955. They're especially crucial for roles with specific requirements like probation periods, performance bonuses, or specialized work arrangements. Having this document in place protects both parties and sets clear expectations from day one.

What are the different types of Offer Letter?

Who should typically use an Offer Letter?

  • HR Managers: Draft and customize Offer Letters according to company policies and Malaysian employment law requirements
  • Legal Department: Reviews and ensures compliance with Employment Act 1955 and other relevant regulations
  • Department Heads: Provide input on role-specific requirements, KPIs, and special terms to include
  • Company Directors: Sign and authorize offers for senior positions or when required by corporate policy
  • Job Candidates: Review, negotiate if needed, and formally accept or decline the employment terms
  • Immigration Officers: Reference these letters when processing work permits for foreign employees

How do you write an Offer Letter?

  • Position Details: Confirm exact job title, department, reporting structure, and work location
  • Compensation Package: Document salary, benefits, bonuses, and any performance-based incentives
  • Employment Terms: Specify start date, working hours, probation period, and leave entitlements
  • Legal Requirements: Check compliance with Employment Act 1955 minimum standards
  • Company Policies: Include references to relevant internal policies and procedures
  • Approval Process: Get necessary internal sign-offs from HR, department head, and finance
  • Document Generation: Use our platform to create a legally-sound Offer Letter tailored to Malaysian requirements

What should be included in an Offer Letter?

  • Job Identification: Clear position title, department, and reporting relationships
  • Compensation Terms: Basic salary, allowances, and benefits as per Employment Act 1955
  • Work Parameters: Hours, location, and duties aligned with Malaysian labor laws
  • Duration Clauses: Start date, probation period, and notice period requirements
  • Legal Compliance: EPF, SOCSO, and statutory contribution statements
  • Confidentiality: Non-disclosure and intellectual property protection terms
  • Acceptance Method: Clear instructions for formal acceptance and deadline
  • Company Details: Full legal name, registration number, and authorized signatory

What's the difference between an Offer Letter and an Employment Letter?

An Offer Letter differs significantly from an Employment Letter in several key aspects under Malaysian law. While both documents relate to employment relationships, they serve distinct purposes and are used at different stages of the employment journey.

  • Timing and Purpose: Offer Letters initiate the employment relationship, outlining proposed terms before acceptance. Employment Letters confirm existing employment status and terms after the relationship is established.
  • Legal Weight: Offer Letters create conditional promises pending acceptance, while Employment Letters document current, active employment arrangements.
  • Content Scope: Offer Letters focus on initial terms like salary, position, and start date. Employment Letters typically include broader details about current role, responsibilities, and performance.
  • Usage Context: Offer Letters are used in recruitment, while Employment Letters serve various purposes like visa applications, bank loans, or employment verification.

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