According to a recent Gartner survey, half of those surveyed had in the prior twelve months accepted a job offer but backed out of the offer prior to starting the job. Is this a sign of the times, with employees having significantly more bargaining power than in times gone by and employers willing to counter-offer (perhaps with higher pay or more flexibility) to keep hold of their talent? It seems so, as we continue to see symptoms of a tight labour market across many sectors.
So what, as the prospective new employer, can you do if this happens to you? In terms of legal recourse, your options may well be limited. Whilst, in theory, the prospective employee might be in breach of contract, in practice the cost to you, both in time and money, of any litigation is likely to exceed any potential damages you might be awarded. There may be exceptions to this if the role you are filling is for a top-ranking senior executive, but even then, the legal position would need to be carefully assessed.
Instead focus your efforts on prevention rather than cure. If you are recruiting for roles, in a tight market, consider probing the employee’s reasons for leaving their current employer more carefully to see if their reasons for leaving stack up. You might even want to ask what the candidate would do if their current employer were to try to persuade them to stay on. Whilst you may not get a straight answer, how they respond may help you decide if their desire to join you is a genuine one or if they are simply using you as a stalking horse to encourage their current employer to up their pay and/ or improve their package. At the very least, you will have taken positive steps to mitigate the risk of the issue arising.
And what if the boot is on the other foot? How easy is it for you, as the employer, to withdraw a job offer? The answer to that will depend on the reason for the withdrawal and how far down the line you are in the process.
If a job offer has been made conditional on the employee satisfying certain criteria (for example, providing satisfactory references or showing evidence of qualifications) and they fail to meet those criteria, then withdrawing the job offer for those reasons should be relatively straightforward – assuming it was clear that the offer was conditional, and the candidate has no credible explanation for not meeting the condition(s).
But what can you do if your circumstances change, and you can no longer employ the candidate through no fault of theirs? This situation is trickier as you will want to consider potential reputational issues as well legal ones. Candidates do not take kindly to accepting a job offer only to have that offer withdrawn – particularly where they have already handed in their notice, and they may well make their displeasure known through social media and word of mouth.
Assuming your hands are tied in terms of needing to withdraw the offer and assuming that the candidates has already accepted your offer and satisfied any conditions tied to it, you would need to give the would-be new recruit notice under the terms of the contract they signed up to. Calculating what the candidate is owed in this situation can be quite complex – there are various moving parts that need to be taken into account, including the notice terms, the timing of the notice and the terms of any signing-on bonus or benefits they were promised. Time is of the essence in these cases, particularly as the value of the notice (or pay in lieu of notice, if appropriate) depends on how much of their notice period falls after the agreed start date.
Leaving aside their contractual entitlements you may want to leave it to see whether the would-be recruit goes to the trouble of bringing a claim (and many won’t) but with an eye to the reputational issues mentioned above, you may want to consider making an ex-gratia payment as a gesture of goodwill. Either way, to reduce the risk of a discrimination claim, you will want to explain to the recruit what has led to the withdrawal of the job offer.
Of course, the majority of recruitments work out as planned but in these tough, competitive times forewarned is forearmed.
This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are reported, the information does not set out all of the facts, the legal arguments presented and the judgments made in every aspect of the case. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, we cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.
