Can new employment offer be withdrawn?

There have been many cases of an employee receiving an employment offer which is then withdrawn. It is a difficult situation for an employee who left a good position for, effectively, nothing.

Where an employee decides to pursue the matter, the starting point is contract law, namely that where a set notice period is agreed, the employer may only terminate the contract in line with that notice period. Even where an employee has not started their role, the courts generally take the view that the contract was formed when an offer has been accepted.

But at what point can an offer for employment be withdrawn? Subject to one caveat, an offer of employment can be withdrawn at any time before it has been accepted by a prospective employee.

The reason for this is that normal contractual principles apply to employment. Since parties are at liberty to contract, an offer can be withdrawn before acceptance.

If the reason for withdrawing an offer is deemed discriminatory on any of the protected grounds under section (5) of the Employment Act, 2007, the withdrawal may leave the employer open to successful claims by the prospective employee.

However, when prospective employees fail criminal background checks, misrepresent their background or fail a drug test in line with the nature of work to be done, there is often no legal recourse if an offer is rescinded based on those discoveries.

If an employer can justify revoking an offer because the company cannot reasonably adjust to accommodate a disability, then the company may also rescind an offer to a disabled candidate without necessarily worrying about the risk of being sued.

What are the risks involved in withdrawing an offer of employment? To answer this question, an employer has to decide whether the offer is conditional or unconditional. Once a prospective employee has accepted an unconditional job offer, there is a legally binding Contract of Employment.

If the employer then decides not to hire the individual, they can take legal action against the employer for ‘breach of contract’. They may also claim loss suffered, especially where a candidate had to resign from an employment to take up the offer and this may also include the cost of moving from his previous station to the new one.

They may be entitled to damages or compensation in line with their notice period. This is to cover for the time for which the prospective employee would have been employed before an employer is permitted to dismiss them. This can be extremely expensive to an employer especially in the case where a prospective employee was to assume a senior role with long notice periods.

However, the same may be reduced where the prospective employee was able to obtain another job immediately after the offer was withdrawn.

For conditional job offers, an employer can withdraw an offer of employment if the prospective employee does not fulfill all the conditions of the offer. The conditions could include satisfactory references, a criminal record check, a qualifications check or a health check. However, an employer must be careful not to withdraw an offer of employment on a discriminatory basis.

For instance, where an employer has made a conditional offer and finds that the health condition of a prospective employee constitutes a disability, or that the employee is pregnant, the employer must be careful as withdrawal of the offer would constitute a direct discrimination.

If the employer decides not to proceed with hiring, the employer should give the candidate notice to which they are entitled under the Act. Failure to do so would be a breach of contract and the prospective employee will be entitled to damages for breach.

The claim would generally be for net salary and any benefit that the prospective employee would have received for the notice period.

In circumstances where the notice period is relatively low, such as where an employee is to serve a period under probation, but an aggrieved employee is less likely to pursue a breach of contract claim against the employer as an award of damages is likely to be low.

How about verbal offer? Where a verbal offer of employment is made and provided that parties intended to enter into a binding agreement when they were speaking, the same is as good as a written contract.

IN WRITING

While it is good practice to telephone a candidate to inform them that you wish to make them an offer, it is important to make clear that a formal offer of employment will follow in writing and to explain any conditions attached to that offer.

How does one minimise the chance of job being withdrawn? First, be honest and forthright As Mark Twain once said, “If you tell the truth, you don’t have to remember anything.” Secondly, consider getting the offer in writing and ask the employer if the job offer letter can specify what will happen if the offer is rescinded. Thirdly, make sure you’re comfortable with the offer and the company.

Lastly, if the company has a bad reputation or the offer seems uncertain, think twice before signing the contract. Legally, companies can rescind most offers; practically speaking, good employers won’t get in the habit of doing so, lest they scare off talented workers.