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In this video, the distinction between an offer letter and an employment agreement is explored, highlighting the potential confusion and legal implications of using the terms interchangeably. An offer letter is defined as any communication from an employer extending a job offer to a candidate. If accepted, the candidate joins the company and starts onboarding. Offer letters typically include details such as job title, salary, supervisor, schedule, and expectations, providing candidates with a clearer understanding of the position. The video emphasizes the importance of HR understanding these differences to protect the employer from unintended legal consequences.