Withdrawal of a job offer

With Brexit chaos, an employer might find themselves in a position where they offered somebody employment with a substantial package and have had to wait three or six months for that new employee to join them, and in that intervening period lots of things have changed, including the appetite to proceed with the agreement that had been struck. Can the employer just withdraw the offer?

The employer may have set-out in their offer letter certain conditions to enable them to withdraw the offer. For example, one of those conditions might be seeing somebody’s qualifications or receipt of satisfactory references from a former employer, if the conditions have not been met then the employer is able to simply withdraw the offer, but it is unlikely that the circumstances that we’re talking about would be covered by such a conditional clause.

The starting point then for the employee pursuing the matter will be the notice period that was agreed. The contract will have been formed when the offer was accepted by the employee. If you’ve got a probationary period included in your offer letter with a short notice period, then that may apply. If not, it is likely to be the longer notice period that you agreed to, which for a senior person could be 3 or 6 months.

Even if no notice period has actually been agreed at the stage of the offer being accepted, a tribunal is likely to find a reasonable contractual notice period of at least one month and use the salary that the person would have reasonably been expected to be paid as the negotiation point for the breach of contract award. McCann v Snozone Limited is an example of this from 2015 where the offer had been made and accepted. It is worth noting that damages in such a case could be more than just salary – if somebody’s package was going to involve other things, then those things would be included as well, as the court seeks to put the person in the same position as if the contract had been properly performed. Pension, Car, Health cover, Commission etc. are all likely to be included.

What about when the employee lets you down? Technically the employee letting you down is breaching the contract that they’ve entered into with you and you will be entitled to pursue them for any damages, so potentially the claim against the employee is for the losses that you might suffer. There have been cases where employers have been able to claim, for example, the costs of providing temporary cover. The practical realities put people off pursuing an individual employee: the costs of doing so usually outweighed by the likelihood of the employer obtaining satisfactory readdress against them (they will say they have no money).

In Tullett Prebon Group Limited v EL-Hajjali the employer had a liquidated damages clause in the contract that had been signed by both parties prior to the employee joining them. The employer was able to quantify what its losses were going to be, and the losses included in the drafting were deemed to be a genuine pre-estimate of that loss, so the employer was able to recover substantial damages. This might be worth thinking about with very senior employees, but they would have to be good for the money if you did need to take action against them.