Why a Letter of Employment is Needed Each Year

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Why a Letter of Employment is Needed Each Year

If your non-profit has employees, whether full-time, part-time, or casual, the nuances of the work arrangement will shift from year to year. It is easy to think the initial Offer of Employment letter will capture enough details for the entire term of employment, but reality tells us that’s just not true.

We all learned a fast lesson about home offices during the pandemic. Suddenly work locations changed, different equipment was needed and much of it physically left the corporate office building. Reimbursements were necessary for business use of home internet and phone access. Work hours might have been adjusted to allow for family demands, and overall, the terms of employment were different.

It doesn’t matter if the changes happened because of the pandemic, or simply because things honestly shift over time. If the changes are not summarized annually, there is a risk that the historical reasons might become lost or forgotten. Changes in management could mean that verbal agreements are no longer honoured. If an employee leaves, promises to turn-over work equipment or files might not happen.

To better track the inevitable changes in work arrangements, a letter confirming details should become an annual task. Let’s call it an Annual Letter of Employment, and it is slightly different from the initial Offer of Employment because it only needs to summarize the 4 key components of an ongoing employment agreement, the initial Offer of Employment and policy will cover the rest.

Wage / Salary

Many organizations offer annual wage increases, based on specific evaluation policies. Capturing those details in the Annual Letter of Employment, ensures both the employee and employer fully understand the wage being paid. If a wage increase is applied, it is important to note the date it begins, such as the first day of the operating year. If wages are tied to a specific step on a wage grid, that should be clearly explained as well. Finally, it is important to note if wages are paid based on hourly rates, or paid as salaried, meaning they are paid out in equal amounts at regular intervals.

It is quite normal for an employee and employer to negotiate changes to work arrangements, but both must follow the law. It is critical to check local employment legislation to be sure everyone complies.

Work Hours

Not every employee wants to work a full 40-hour week. Some employees are looking for a different arrangement that can vary from part-time, to casual, to being able to leave every day at 3:15. It is more common these days, for employees to request changes to work hours for better work-life balance. A flexible employer is usually willing to work with an employee to find a mutually beneficial arrangement. The details of an employee’s work hours should be summarized to avoid misunderstanding, and to capture the terms negotiated. 

Work Location and Details

Gone are the days of everyone working from the same central corporate location. Non-profits are starting to recognize the benefits of allowing employees to work from home offices. But home offices are much more complicated to administer, and summarizing those details is important to ensure employee and employer are in alignment. Don’t forget to include any reimbursements paid for home offices (phone, internet, rent) and the payment schedule.


Supervisors change. Work duties shift. Restating the name of an employee’s supervisor, in the Annual Letter of Employment avoids confusion.

Writing an Annual Letter of Employment is good, common sense, human resources management. The letter records any negotiated changes to the employee work agreement that will be applied to the upcoming operating year. The benefits of the letter include providing a safeguard to protect both employers and employees. A side benefit for employees is that the letter can also be used as verification of employment when buying a house, signing a lease, or applying for credit.

An Annual Letter of Employment can also be used mid-year to capture details of a changing work arrangement. For example, and employee might take on additional responsibilities and the details, including compensation, should be recorded.

To begin using the Annual Letter of Employment at your non-profit: 

  • First select the date you will release the letter each year, such as at the start of the new operating year, or immediately following annual evaluations.
  • Create each letter using formal letterhead, addressed to the employee.
  • Open with a brief (1-2 sentence) greeting paragraph.
  • Follow with 4 headers for each of the sections provided (or use your own).
  • Under each header summarize the details of the work agreement, including changes, or noting status quo.
  • Provide a place for the employee to sign and date their acceptance of the employment agreement.
  • Close the letter with the usual thanks and signature of the employee's supervisor.
  • Once the letter is signed by the employee, the original is kept in the employee’s official personnel file, and a copy provided to the employee.

When an employer wants to capture changes to employee work agreements, an Annual Letter of Employment is a simple 1-page record of the negotiated details.

Thanks for taking the time to read my ideas. My mission is to take the mystery out of running a small non-profit. If you know someone who needs to read this, why not grab the link, and share it with them. Let’s work together to build clarity in employee work agreements.


Hi, I'm Christie Saas, former board member, current Executive Director, and non-profit volunteer. I remember well, those early years when I lacked the training, the confidence, and the work-life balance to focus on becoming the best non-profit leader I could be.

Fast-forward past many bumps in the road, lessons learned, and you’ll find me still in the trenches, but a little wiser, a little calmer, and a whole lot happier. I love my work and I want to help you love yours too.

I created ChristieSaas.com to give you tools, tips, and templates to remove the mystery of learning to run a small non-profit. If you’re a brand-new non-profit leader, or a little more seasoned, someone who’s looking to make a meaningful contribution and still have time for a full life away from the job, you’re in the right place.

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