Withdrawing an offer
During these uncertain times, I have received a number of enquiries from both employees at risk of losing a new job and companies unsure what to do with people due to start a new role where there is no longer any work for them to do.
To assist, I have set out below how this situation can be dealt with.
An employer may wish to withdraw an offer of employment for a number of reasons, for example, because:
- Its business requirements have changed. e.g. COVID-19
- It has unexpectedly received information about the applicant which casts doubt on the desirability of employing them.
- One of the matters on which the offer was expressed to be conditional, such as receipt of satisfactory references, has not been fulfilled.
It is perfectly possible to withdraw an offer of employment where no contract has been formed or the offer is conditional.
Before the offer has been accepted, you can withdraw from the role without issue. Where you make an offer conditional on things like references and they turn out poor, you can withdraw the offer too.
However, where the contract has been formed (verbally or in writing), you should be wary of discrimination issues and contract law requirements.
The company should be prepared for the disappointed applicant to allege that the employer’s reason for withdrawing the job offer was unlawful (for example, that it was an act of discrimination).
Therefore, employers should document their reasons for withdrawing an offer and retain documentary evidence that supports the reasons for its decision.
Unless the employee has previous relevant continuous service (for example with the same or an associated employer) they will not have sufficient continuous service to bring an ordinary unfair dismissal claim.
However, claims relating to discrimination do not need to fulfil any qualifying period of service to bring an unfair dismissal claim.
Employers must also be careful not to terminate the contract for a discriminatory reason.
The withdrawal of an offer may have implications in contract law since an employee may have a claim for breach of contract if the offer is withdrawn after it has been accepted.
Once any conditions to which the offer was made subject to have been satisfied and the employee has accepted the offer, a contract of employment will be in existence. This does not need to be in writing.
In these circumstances, the only way for the employer to terminate the contract is to give the employee the notice set out in the contract.
Failure to do so will be a breach of contract, for which the employee can sue either in an employment tribunal or small claims court.
The employee’s loss in respect of the breach of contract will normally only begin to accrue after the date on which their employment was due to start (because the employee will not generally be entitled to any benefits before they start work).
Therefore, if the employee has a four-week notice period, but the employer wrongfully terminates the contract one week before the employee was due to start work, damages will normally be limited to three weeks’ earnings.
Overall it may be disappointing to the new recruit to have the role withdrawn but as the government job retention scheme, does not include anyone recruited since 1 March, they may be better off looking for another role that can provide them with work and full pay.