Withdrawing an offer of employment – Part 1

This is the first part of a three part series on withdrawing an offer of employment.

Relief is often sighed once a preferred candidate has accepted an offer of employment. Those sighs can sometimes turn to groans if that candidate is not as perfect for the role as originally thought or the need for that candidate has unexpectedly waned.

There are many reasons why an employer may wish to withdraw an offer of employment. However, withdrawing an offer of employment is not without its risks. Employers often mistakenly think that they can simply withdraw an offer of employment if a candidate has not started working yet. This is not always the case. The timing, the reasons and the agreement made with the candidate, can all have an impact on the level of risk an employer is taking in withdrawing an offer. These factors are explored below.

Can I withdraw an offer of employment before it has been accepted by a candidate?

Subject to one caveat, an offer of employment may be withdrawn at any time before it has been accepted by a candidate. The reason for this is that normal contractual principles apply to employment contracts. Like with any other contract, if an offer has not been accepted, there is no binding contract in place.

If the reason for withdrawing an offer is discriminatory on any of the nine protected grounds (outlined below), the withdrawal of an offer could leave a prospective employer open to a successful claim under the Employment Equality Acts.

However, in circumstances where an employer can prove that the withdrawal of an offer was unrelated to any of the nine protected grounds, an offer of employment can be withdrawn with little risk before it has been accepted.

The candidate has accepted our offer. What risks are there to the company if we withdraw the offer?

Once a candidate has accepted an unconditional offer of employment, a binding contract of employment exists between the employer and the candidate, even if the candidate has not yet started working with the employer.

If the employer decides not to proceed with hiring the candidate, the employer should give the candidate the notice to which they are entitled under the contract. Failure to do so would be a breach of contract and the candidate may be entitled to damages for that breach. The value of the candidate’s claim would generally be the net salary and any benefits that the candidate would have received during their notice period.
Newly recruited employees are usually subject to a probationary period which provides for a shorter notice period if dismissal occurs during the probationary period. In circumstances where the notice period is relatively short, aggrieved candidates are less likely to pursue a breach of contract claim against a prospective employer as any award of damages is likely to be low.

However, if an offer of employment has been made to a more senior candidate, that offer may include a longer notice period. In those circumstances the value of the candidate’s claim could be high, which may increase the likelihood of that candidate taking a breach of contract claim.

What if the offer was verbal and the candidate accepted the offer but the company no longer wants to proceed with hiring the candidate?

Contracts do not necessarily have to be in writing to be binding. While oral contracts are more difficult to prove, if both parties intended to be bound by the agreement, this is sufficient to create a legally binding contract.

If the company withdraws an unconditional offer, it is at risk of a breach of contract claim as outlined above. However, in circumstances where the offer was oral, the details of the probationary period and the notice period may not have been discussed. Accordingly, such a claim is likely to be more difficult for a candidate to prove.

If an oral offer is made to a candidate, it should be made clear that it is subject to a formal offer being made to the candidate and the satisfaction of pre-conditions that should be explained to the candidate.

Part 2 will cover:-

• high risk reasons for withdrawing an offer of employment and
• pre-conditions to employment

Part 3 will cover:-

• a recent case highlighting the importance of pre-conditions in a contract of employment.

For further information on this topic, please contact Laura Graham at lgraham@reddycharlton.ie