In this month’s article we explore Offers of Employment. We consider when they become legally binding and how, as well as how you can successfully and lawfully rescind one, if required.
One of the biggest misconceptions in this area is the belief that the employment contract is not valid until the employment commences, that is, changes including withdrawing the offer entirely, can be made at will up until the prospective employee’s initial day.
Firstly, remember legally a job offer, and acceptance of that offer, can be verbal or in writing.
In reality, in terms of Employment Law, once an unconditional offer has been made and accepted, there will be a legally binding contract of employment regardless of when the employee is proposed to start working. This will still be the case even where the precise terms of the employment contract have yet to be agreed in writing. This is because it is possible for certain terms to be implied into the contract by the courts or tribunal.
In fact the most important factor which determines if a Contract of Employment exists or not, is not when it was made or when the employee starts work, but whether the offer made was conditional or unconditional.
The types of conditions that are typically attached to a job offer include receipt of satisfactory references, criminal record or medical checks, proof of academic qualifications, or proof of the right to work in the UK. This means, for example, if an applicant fails a DBS check for a job working with children, the offer will not in fact crystallise.
Most offers are made subject to conditions. If a candidate does not meet the conditions, an employer can usually withdraw the offer with less risk, provided the conditions were clearly stated.
With this in mind, it’s important that Employers include any applicable conditions in the offer letter before sending to the candidate, affirming that no contract is in place until all conditions are met. They might also consider waiting until all conditions are met before confirming a start date.
But, what happens if an employer needs to withdraw an offer once made, either on a conditional or unconditional basis?
Generally speaking, no employer willfully wants to withdraw an offer of Employment, time and effort has been spent on the process and an end is clearly in sight, but unfortunately there are occasions when this happens.
Even where an employer is initially convinced they have found the perfect person for the job, there may be occasions where information comes to light post-interview that casts doubt on an applicant’s suitability.
This could be because the applicant has received an unfavourable reference, failed to pass a criminal record check or has been unable to provide proof of their qualifications. Of course, it could also be for reasons wholly unrelated to the calibre of the applicant, including organisational changes, such as where last-minute budget cuts mean the role is no longer economically viable.
The action you as an employer can take will depend on whether the offer made was conditional or unconditional.
Effectively, any offer of employment can be withdrawn right up until the candidate has accepted the offer.
It can become more complex if the offer has been accepted. However, if the offer included conditions, you can still retract it if these were not met. The employer can lawfully withdraw that offer because it remains incomplete unless and until all conditions are satisfied.
If an employer has issued an unconditional offer and the candidate has accepted, they have entered into a contract with them. Employers must treat a candidate who’s accepted the unconditional offer as an employee. Therefore, they should view it as ending the employment, from a legal perspective, this would qualify as a dismissal, even if they had not yet started work. Employers should follow a process and serve a notice period in line with their company policy and the candidate’s contract.
As a side note: It is important for Employers to be aware that they too can hold prospective employees to their contract of Employment, should they change their mind, even if they have not yet started.
If someone accepts an unconditional offer and then changes their mind, the employer can:
Employer should be aware that withdrawing an offer of employment once made can lead to several legal or employee relations issues, the main ones being;
Breach of contract
A candidate who has accepted an unconditional offer could claim compensation for losses, such as wages they would have earned or money lost by leaving their previous job, or even relocation or Visa expenses already made.
Discrimination claims
Withdrawing an offer for reasons connected to protected characteristics such as age, disability, race, religion, or pregnancy can lead to a discrimination claim. These claims can arise and be brought to Tribunal even if the candidate has not yet started work.
Reputational impact
Word spreads quickly, especially on social platforms, particularly if you have a disgruntled prospective employee. Poorly handled withdrawals can damage your employer brand and make future recruitment more difficult.
Whilst there are occasionally unanticipated or unavoidable circumstances which can result in a revoked Job Offer, generally speaking, there are best practice ways to minimise the risk of having to withdraw an offer of employment, employers might consider the following:
In Kankanalapalli v Loesche Energy Systems (LES), the Employment Appeal Tribunal (EAT) had to consider whether an offer made by LES to Mr Sita Rama Swamy Kankanalapalli was actually conditional and, if not, what notice would be required to terminate that contract.
Initially, the employment tribunal stated that the right to work checks and reference conditions in the offer had not been met and, therefore, there was no contract in place. What’s more, since Kankanalapalli had not started the job, he was not entitled to any notice and had in fact been given more than a week’s notice.
The Employment Appeals Tribunal (EAT) held a different view, deciding that the tribunal was wrong to find that the conditions referred to were ‘conditions precedent’ – conditions that had to be met before a contract would be formed.
Whether conditions were ‘precedent’ or ‘subsequent’ (which would not prevent a contract being formed but would entitle the employer to terminate if they were not met) is a question of contractual construction.
On the facts of this case, the conditions referred to were ‘subsequent’, with the following factors being relevant:
Therefore, the EAT held that there was a contract of employment in place when Kankanalapalli accepted the offer, and LES would have to give notice to terminate it in line with Contractual Obligations.
This Case Law Example is a clear instance of where legally a Contract of Employment existed, even if the Employer did not believe that to be the case. It also highlights the importance of language and clarity of consequence when drafting a Conditional Offer of Employment.
People Management Solutions can provide advice and support to assist in preparing and making Job Offers which not only work for your business but also avoid costly or sticky situations down the line. If you have any queries regarding Offers of Employment, or require any assistance in this area, please do reach out to us.