Do Directors Need Probation and Different Policies? Seeking Offer Letter Samples

Dear Seniors, do directors need to serve a probation period because they would be withdrawing a salary from the company? Can anyone help me with a sample of an offer letter issued to a director? They would be on the company payroll.

Policies for Directors

Apart from that, I would like to know if the policies that are generally applicable to other employees are the same for directors, or are there any discriminations made? Though I used the SEARCH tab, I didn't get any specific sample.

With regards.

Dear TG,
Offer Letter for Directors

Point 1: Whatever offer letter format is used in your company should be the same for directors. The offer letter should be signed by an authorized signatory like the Chairman or Managing Director.

Point 2: The preparation of the offer letter is our creation and should be tailored to our organization's requirements.

Point 3: Whether a probation period is served or not depends on the management policy.

Point 4: It is essential for the salary to be shown in accounts because if we appoint someone as a director, their name must appear in the Office of Company Register, as per the Company Act.

Point 5: Salary should be given in the form of a cheque or bank account transfer.

Point 6: In my opinion, issuing an Offer cum Appointment letter to directors is better. I believe it is the best way to communicate the organization's policy and proceedings to them.

I would like your comments on the above points.

Regards
[Email Removed For Privacy Reasons]

First of all, thank you so much for your prompt reply! I also think that the offer letter to directors should be the same as for other employees. However, I believe they should also serve a probation period because they are paid such a hefty amount. You are correct that it is at the Management's discretion.

I would also like to know whether it is necessary to get their offer letter signed by the MD, or can it be issued by the HR department as well?

Regards,
TG.

Director Appointment and Probation Guidelines

If you are talking about a Director on the Board, the process is different. Legally, you cannot designate anyone as a Director unless they are on the Board. However, some companies are diluting this rule.

1. If you want to appoint a Director on the Board, the appointment must be approved by the General Body. An appointment letter is issued by the Chairman/MD after approval by the General Body. Terms and Conditions are also approved by the General Body.

2. If you are referring to a Director who is not on the Board, it is equivalent to a President/Vice President/General Manager, etc.

3. In such cases, offers are generally signed by the Head/CEO of the Company to maintain protocol. Such senior individuals may not appreciate a letter signed by a junior person.

4. The probation clause for such senior levels is not necessary. The purpose of probation is to assess performance in six months to one year and terminate in case of non-performance. In senior levels, termination by giving one or three months' notice is legal. Normally, in such cases, the employee quits, or the Management asks for resignation.

For appointments as a Director on the Board, there is no probation clause as per the Indian Companies Act.

If a person is appointed as a Director who is not on the Board, my advice is not to introduce a probation clause. In today's context, such a probation clause has no relevance for senior-level recruitments. It was used about 25-30 years ago when certain benefits like PF were not applicable during the probation period. If possible, avoid giving designations as Director if the person is not on the Board. Instead, give designations like COO, Business Head, President, Vice President.

Thanks,

Regards,
T Sivasankaran

Dear TG, Thanks for your response.

Director Offer cum Appointment Letter

It is suggestible that the Director Offer cum Appointment letter be signed by the Chairman/MD. However, the HR Head can issue the letter if the Chairman/MD is not available or as per their directions. This is my view.

Regards,
kpk
Regards

Thank you so much. I will keep your suggestions in mind! However, the people appointed are board members, and the MD of the company has asked me to designate them as "Directors." So, I believe a probation clause is not required. Thanks once again!

Regards,
TG.