How to Decode Your First Offer Letter in 3 Minutes?

Infographic 1Just like you prepare a checklist while applying to universities and then receiving admission offers, you must have a checklist that helps you make the right choice when evaluating and comparing offers for your first job.

The Actual Offer:

Once you receive an offer, you need to spend the first one minute looking for two most important things.

Annual CTC: Simply put, Cost to Company or CTC is your gross salary. It is not the actual salary that you will take home. However, it offers a detailed break-up of taxable and non-taxable income components that are optional and impact your net salary.

For instance, House Rent Allowance or HRA is a non-taxable component that can increase your take-home income only if you show proof of paying rent.

Since this information can be overwhelming, you can ask your potential employer to share an estimated tax implication of the proposed CTC.

Designation: While it is important to start your career with a successful organization, it is equally important to understand the role being offered to you.

This becomes especially important when you need to decide between two or more offers. After all, the designation hints at the kind of work opportunities and career growth that will come your way.

Nature of employment:

Once you have a fair idea of the role and compensation benefits being offered to you, you need to look out for the terms of employment being extended to you.

Employment type: It is important to understand whether the role being offered to you is on full-time basis, permanent basis, contractual basis, or a project-based one. If this information isn’t mentioned, ask for it. After all, you don’t want to be in for any rude surprise once you have accepted the offer.

Probation period: Most companies include a 3 to 6-month probation period during which, they can ask you to quit in case of dissatisfactory performance. It is also typically a period that sees lesser employment benefits such as leaves, severance packages in case of downsizing etc.

Legal bond implications: Quitting a company might be the last thing on your mind when accepting an offer. However, it remains an unavoidable fact of life. Hence, it is important to understand the implications of signing a legal bond where companies expect you to pay back a certain amount should you quit your job before a specified tenure.

Work culture:

Lastly, your offer letter also reflects the kind of work environment and perks that you can expect. While these may not seem life-altering initially, they do hint at the kind of importance your potential employer aligns to your role in the organization.

Leave and vacation policies, non-monetary perks, family insurance, and medical benefits are some of the things you should look out for in an offer from a potential employer.

However, do not mistake terms such as dearness allowance and conveyance allowance as perks if they are part of your CTC. Anything mentioned in your CTC is part of your salary and not a perk being offered to you as part of the company’s commitment to its employees’ well-being.

On a concluding note, remember that your first job sets the path for your career. Therefore, you must be extra careful while taking up your first job.  You can’t just accept the offer letter based on one factor. Consider all the factors before signing your offer letter. Lastly, trust your intuition and go with the job offer that excites you and makes you look forward to doing some truly valuable work.

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