How to Read an Offer Letter

An offer letter can contain important details about your compensation, employment conditions and obligations.

1. Job title

Make sure the designation matches what you discussed.

2. Fixed salary

Identify the amount that forms your fixed compensation.

3. Variable pay

Find out whether incentives are guaranteed or performance-linked.

4. Bonus

Check whether joining, annual or retention bonuses have conditions attached.

5. PF

Understand how employee and employer PF contributions are represented in the compensation structure.

6. Gratuity

Check whether gratuity is included in the stated CTC.

7. ESOPs

If equity is included, understand:

• Number of shares / options
• Vesting schedule
• Exercise price
• Vesting conditions
• What happens when you leave

8. Probation

• Duration
• Salary during probation
• Notice period
• Confirmation process

9. Notice period

A 30-day notice period and a 90-day notice period can have a major effect on your ability to switch jobs.

10. Location

Check whether the company can change your work location.

11. Working arrangement

Confirm whether the role is remote, hybrid or office-based.

12. Working hours

Check whether shifts, weekends or extended working hours are expected.

13. Bond or service agreement

Read any clause requiring you to remain employed for a particular period.

14. Termination conditions

Understand the conditions under which either side can terminate employment.

15. Confidentiality and restrictive clauses

Read confidentiality, IP ownership and other post-employment provisions carefully.

Most important rule

Separate the offer into money (fixed + variable + bonus + equity), conditions (role + location + hours + probation + notice) and risk (variable targets + bonds + clawbacks + restrictive clauses).