“Offer Letter differs from Employment Contract; which controls?”

Question: What if there is an inconsistency and difference between the job offer you’ve signed and the employment contract? The salary, leave credits and other benefits are not the same.

Manila, Philippines

Answer: Dear Kath: It is more common than you might think that I am contacted by people who received “promises,” “assurances,” or “representations” during recruitment sessions, job interviews, or in offer letters that are not later fulfilled, or are “changed” by employment contracts or other documents. Which controls, and what can you do? These are my thoughts: 

1. An “offer letter” and an “employment contract” are both kinds of contracts, and are governed by their words, not their titles. “Offer Letters” are just what they sound like: an offer of employment on certain terms and conditions, written by the employer in the form of a letter, which can be “accepted” by signing and returning it to the employer, and then binding on both parties.   

“Employment Contracts” are essentially the same: they, too, are in writing and contain terms and conditions of employment; once “offered” and “accepted,” they are binding on both employee and employer. They are usually a bit more formal, a bit longer, and often with a different title, but those things don’t change their essential nature: like offer letters, they are contracts. 

So, Kath, you seem to have two “contracts.” 

Those interested in the general subject of “Offer Letters” might want to review a newsletter I wrote entitled “Offer Letters – What to Look For, What to Look Out For.” To do so, just [click here.]

Prevent problems early so you don’t have to solve them later. To do all you can to make sure there is no confusion in the major terms of your employment, we offer a Model Letter Confirming Terms of Job Offer by Employer. “What to Say, and How to Say It.™” To obtain a copy for your use, just [click here.] Delivered by Email – Instantly! 

2. If you and your employer have signed the Offer Letter, but NOT YET SIGNED the  Employment Contract, now is the time to prevent a problem by calmly pointing out the differences between the two. From your letter, I cannot determine whether you have signed just the Offer Letter, and are now examining the Employment Agreement, or whether you have signed both. If you have not signed the Employment Agreement, but are now examining it carefully before signing it, “my hat is off to you.” Now would be the best time to raise the issue of the differences, and do what you can to make the two documents consistent with one another.

To clarify important – but not major – terms of your employment, such as (a) whether you will be required to sign a non-compete, and (b) when your health insurance coverage begins, we offer a “Memo to HR to Clarify Benefits and Burdens” of new employment.  “What to Say, and How to Say It.™” To obtain your copy to adapt and use, just [click here.] Delivered by Email – Instantly!

3. If you and your employer have SIGNED BOTH the Offer Letter AND the Employment Contract, chances are that the Employment Contract “predominates” over the Offer Letter, for two reasons. In my experience, most “Offer Letters” are signed first, and then, if an Employment Contract” is desired by the parties, it is signed second. If that is the case, there are two reasons – both recognized by the law – to expect that the Employment Contract “governs” and “predominates” over the Offer Letter.

First, most Employment Contracts have what is called an “Integration Clause,” or “Entire Agreement” provision. This is what they usually say, “This agreement constitutes the entire agreement between the parties, and replaces and supersedes all other agreements, understandings, representations and contracts.” If your Employment Agreement says that, and it was signed second, it definitely “governs” and “controls.”

Second, unless it is expressed in words to the contrary, there is a general presumption made in contract interpretation that “If a second agreement or contract is signed by two parties, if it is different, then it is meant to be different, and is meant to govern and control.” Frankly, this is a rule of contract interpretation that is based in common experience and common sense.

Still, words that are expressed are the primary focus in contract matters.  

4. When we look at contracts, we look first at “what was expressed,” and if we find confusion, lack of clarity, or inconsistency, we then look to “what did the parties likely intend?” Kath, from what you have written, it seems to me that your “two contracts” with your employer are, at least in some respects, consistent with one another, for examples, that both identify you as the “employee,” and both identify your employer as the “employer.” My guess is that both of your “two contracts” also state that you are to work in the Philippines. So, as to certain terms and provisions, your “two contracts” seem to be consistent with one another.

Where your “two contracts” differ in what each of them expressed – in salary, leave credits and other benefits – we must look at the two parties’ respective intentions – what, in effect, they meant.

The differences could be the result of a mistake by one of them in, for example, the typing of the agreement. Or, the differences could be the result of one of the parties simply not noticing that changes were made in the later “contract,” and simply signing it, unaware of the changes. The differences could even be the result of a lapse in memory of what was discussed.

There are no specific things to look at to determine parties “intent” in their contracts, but we look to all of the relevant facts, events and circumstances, including, among others, such things as (a) email communications, (b) postings for the position, (c) the employer’s usual practices and policies, (d) statements by recruiters or in interviews, and (e) plain old common sense.

We offer a 152-Point Master Checklist of Employment Negotiation Items to help you make sure you have not (a) forgotten to ask for anything, (b) failed to raise any issues, and (c) that your interests are protected in your offer letter and/or employment contract. To obtain a copy, just [click here.] Delivered by Email – Instantly! 

5. So, to summarize, these are the steps to review to determine your answer:

(i) If they are different, were they both signed? If not, now is the time to request consistency;
(ii) If they were both signed, does the Employment Contract contain an “integration clause?
(iii) If they were both signed, was the Employment Contract signed second?
(iv) If the words expressed in the contracts don’t give us a clear answer of what was intended, we then look to such facts, events and circumstances “outside the contracts,” including among others, (a) email communications, (b) job postings on job boards, (c) correspondence by recruiters, (d) the employer’s usual policies and practices, and even (e) what is most common in the industry.

As you can see, Kath, differences and discrepancies between Offer Letters and Employment Contracts can be vexing problems to solve. That said, in my experience, keen observations, sensible thoughts, and good faith usually reach fair resolutions. If you have the educations, skills, training, experience and – most importantly – positive attitude that the employer seeks, anything is possible.

My Best,
Al Sklover

P.S.: If you would like additional attention and assistance with your workplace opportunity or problem, and how to best deal with it, I am available for 30-minute, 60-minute, or 120-minute telephone consultations. If you would like a consultation, just [click here.] [newjob]

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© 2013 Alan L. Sklover, All Rights Reserved.

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