We made a verbal offer of employment, conditional on the individual satisfying certain pre-employment checks. Can we withdraw that offer before the pre-employment checks have been completed on grounds that the role has been withdrawn for operational reasons?
The legal consequences of withdrawing an offer of employment will generally depend on the specific circumstances of the offer and the reasons for withdrawing it. The primary issue is likely to be whether, as a result of the offer being made, a contract of employment has been formed.
An offer of employment can be made orally or in writing, although, obviously, where an offer is made orally there is a risk the parties don’t agree on what the precise terms of the offer are/not all the terms of the offer have been fully identified, and that the parties proceed on different understandings.
In the normal course, however, once an offer of employment has been accepted and any applicable conditions have been met, a binding contract of employment is formed.
If, after the contract has been formed the employer then changes their mind, they will be unable to withdraw the offer and will instead have to terminate the employment contract by giving the employee their contractual notice, whether or not the employee has started work.
In practice this would usually mean making the employee a payment in lieu of notice.
An employee will generally need to have at least two years’ continuous employment to qualify for unfair dismissal protection, which rules out an unfair dismissal claim for most newly-engaged employees in this situation (unless the reason for terminating the contract was discriminatory or automatically unfair, in which case no qualifying period for bringing a claim may be required).
Usually where a conditional offer of employment is made in writing, the offer will be expressly stated to be ‘conditional on and subject to’ certain requirements being fulfilled.
It will be a question of fact in each case whether the offer of employment was conditional, and if so, whether the requirements listed in the conditions were fulfilled. As already mentioned, where the offer was made verbally it will be particularly important to establish the precise terms of the offer, and whether it was in fact ‘conditional on and subject to’ certain requirements being fulfilled.
Where a conditional offer of employment is made, a contract will not come into effect until the condition(s) have been met.
If the conditions have not been met, a prospective employer may be able to withdraw their offer without liability.
It may also be relevant to establish whether as part of the terms of the offer it was explicit that the employer would confirm the offer only once it was satisfied that the conditions had been fulfilled to its satisfaction.
Withdrawing an offer
Where an employer wishes to withdraw the offer of employment before certain pre-employment checks have been completed, i.e. effectively before it knows whether or not the individual will have fulfilled the conditions on which the offer was purportedly based, it will be necessary to establish whether or not:
• at the point the employer seeks to withdraw the offer, it is evident that a contract had already been formed (in which case, the employer will be in breach of contract if it proceeds to terminate the employment without complying with contractual notice provisions), and
• if the contract has not yet been formed, e.g. there has not been unconditional acceptance of the offer or conditions to which the offer was subject have not been satisfied, the employer may be able to withdraw the offer without liability.
Motor Industry Legal Services provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.