EAT ruling on job offer withdrawal

Background

The claimant, Mr Kankanalapalli was offered a role as a project manager, which was expressed to be subject to satisfactory references, a right to work check and successful completion of a six-month probationary period. The offer letter set out the key terms (to include the salary and a start date) but it was silent in relation to any notice period. The employer also agreed to contribute towards relocation costs.

Mr Kankanalapalli accepted the offer over email and completed the new-starter paperwork, including providing referee details and the right to work documents.

A few weeks later, the employer wrote to Mr Kankanalapalli withdrawing the offer due to delays in the project.

Mr Kankanalapalli brought a claim for breach of contract, citing the withdrawal of the offer and failure to pay any notice pay. The Employment Tribunal dismissed the claim, taking the view that the offer was expressed to be conditional, and the employer had not yet received references or completed the right to work checks (which required original documents).

EAT decision

The EAT disagreed.

The key issue for the EAT was whether the conditions that were attached to the offer were conditions precedent (i.e. conditions which must first be satisfied before a contract can be said to be formed), or conditions subsequent (i.e. where acceptance of an offer gives rise to a binding contract but such conditions, if not satisfied, will terminate it). This will be a matter of construction.

In this case, the EAT concluded that the conditions were conditions subsequent and a binding contact was formed at the point the offer was accepted.

It considered that each of the conditions were grouped together in the offer letter and one of these conditions (passing the probationary period) could only be satisfied after employment began. As there had been no attempt to differentiate between the different conditions, this effectively prevented the EAT from finding they could be conditions precedent.

It was also relevant that the offer letter included the key terms and both parties had treated the contract as binding (to include the employer starting the onboarding process). The result of this was the employer did not have an unrestricted right to withdraw the offer for reasons that were unrelated to the conditions subsequent.

The EAT went on to consider the fact that the offer letter was silent on notice, which meant that a reasonable notice period had to be implied. It held that what is reasonable will depend on the facts and it may be more than the statutory notice period.

In this scenario, the EAT considered the seniority of the role, the fact that a relocation was required and the lengthy interview process, and concluded that three months would be a reasonable notice period. The employer was required to pay this amount.

Key takeaways

The case serves as a reminder for employers that simply labelling an offer as “conditional” will not prevent a binding contract from being formed. This in turn has implications for withdrawing any such offers without due consideration, and it may be worth obtaining legal advice at this stage.

If employers intend for certain conditions to be met before a contract is formed, this needs to be expressed clearly, and such conditions should be separated from any conditions subsequent (i.e. probation periods).

It also highlights the importance of including notice periods in any offer letter. This should cover both the standard notice period and the notice period that should apply during a probation period. Addressing such matters will avoid the Employment Tribunal implying its own view on what is reasonable.