Now they have it, now they don’t – the dos and don’ts of withdrawing job offers

There might be a number of reasons why an employer would want to withdraw an offer of employment.  For example, its business requirements may have changed so it no longer has any need for the person/role it had offered a job to.  Or, one of the matters expressed to be a condition of the contract (satisfactory references, or valid immigration status for example) may not have been fulfilled.  Or the employer may have received information about the individual which has cast doubt on the desire to recruit them. Is an employer able to withdraw a job offer?

Is there a contract? 
The starting point is to consider whether a contract of employment has come into existence.  This will be the case once the offer is accepted by the candidate and any conditions to which the offer was made subject have been satisfied.
Note that a letter accepting an offer takes effect once it is posted, whilst withdrawal takes effect once it has been received by the individual.  So if you send a letter withdrawing a job offer and it crosses with a letter sent by the individual accepting it, it is likely that a binding contract will be in existence.
 
If there is a contract in place, it may only be terminated in accordance with its terms.  That is, serving notice to terminate the employment. In most cases, the first few months of employment will be a probation period with a relatively short notice period, so the cost to the employer of doing this should not be significant.  

Failure to terminate in accordance with the contract would constitute a breach of contract, for which an employee can sue for damages either in the Employment Tribunal or civil courts.  The amount of damages would typically be the net salary and cash value of any benefits the individual would have received during his/her notice period.  However, loss in respect of the breach will normally only begin to accrue after the date the individual was due to start work.    

Top tips
Here are a few tips to think about when considering withdrawing a job offer:

1. DO: make offers of employment subject to certain conditions, such as satisfactory references, proof of right to work in the UK and undertake the job in question and any others that are essential for the role (for example, a Disclosure and Barring Service check, or proof of qualifications).  That way, you can withdraw the offer – even after the individual has purported to accept it – if a condition to the agreement is not been met since no contract will have come into existence. We can draft appropriate pre-conditions for you.
2. DON’T:  withdraw an offer without giving the individual any explanation as to why you are doing so.  You do not have to give a huge amount of detail, but some explanation will alleviate the risk of a possible discrimination claim.  We can advise you if you are unsure about whether your particular reason or how it is expressed in order to limit the risk of such allegations.
3. DO:  document and keep a record of the reason for wishing to withdraw the offer and who made the decision.  Ensure that the decision is not tainted by discrimination (for example, because the individual has just informed you that she is pregnant).  Such documentation would be helpful contemporaneous evidence should you be faced with a discrimination claim/allegation.  Remember that discrimination claims carry the potential of uncapped compensation and are not subject to any minimum service requirement.
4. DO:  make sure that if you are withdrawing your offer after a binding contract comes into existence (i.e., after it has been accepted by the individual and all pre-conditions have been met), you terminate the contract in accordance with its terms.  That is, serve notice in accordance with the contract and pay the individual in respect of that notice period.
5. DO:  try to withdraw the offer before the individual purports to accept it (i.e. before there is a binding contract in place).  It is best to send letters withdrawing a job offer by Special Delivery where you can track receipt and guarantee delivery by a certain time.  Speak to your legal adviser of you are in doubt about whether there is a binding contract in place.   

Stop press
Job applicants are protected under discrimination legislation.  However, the Court of Justice of the European Union (CJEU) has recently held in a case referred from Germany that vexatious job applicants who apply for positions not to gain employment but to gain the status of job applicant so as to bring discrimination claims are not protected by EU discrimination laws (Kratzer v R+V Allgemeine Versicherung AG).  The unsuccessful job applicant in that case demanded compensation for age discrimination when his application for a trainee position was rejected.  He refused to attend an interview he was later invited to (the company said his application was rejected in error) and brought discrimination proceedings against the company.  He then claimed further compensation for sex discrimination when he discovered that the trainee posts had been offered to women.  The CJEU held that becoming a job applicant for the purpose of bringing discrimination claims and seeking compensation (as opposed to obtaining employment) is outside the scope of the relevant Directives.