Many employers assume that making a conditional offer of employment means they can withdraw the offer at any time before the employee starts work. However, a recent Employment Appeal Tribunal (EAT) case highlights that this is not always the case.
The case demonstrates that a binding employment contract can exist even where conditions such as references, right to work checks, or probation periods have not yet been completed.
For employers, this creates a potential risk of breach of contract claims and notice pay liabilities if an offer is withdrawn incorrectly.
In this article, we look at what happened in the case, what employers can learn from it, and how businesses can reduce risk when issuing conditional offers.
What Happened in the Case?
The employer offered a candidate a role subject to:
- Satisfactory references
- A successful right to work check
- Completion of a six-month probation period
The candidate accepted the conditional offers of employment. However, before their start date, the employer withdrew the offer for reasons unrelated to any of the stated conditions.
The employer argued that no employment contract had been formed because the offer was conditional. The candidate disagreed and argued that a binding contract already existed.
The EAT ultimately agreed with the candidate.
Why Did the EAT Decide a Contract Existed?
The tribunal looked at the wording and overall circumstances surrounding the offer.
Several key factors influenced the decision:
1. The Offer Required Acceptance
The employer required the candidate to unconditionally accept the offer before steps were taken to satisfy the conditions.
This suggested the employer intended a binding agreement to exist once the conditional offers of employment was accepted.
2. The Documentation Referred to Termination
The new starter paperwork referred to employment being terminated if conditions were not met later.
This implied employment already existed and could then be ended.
3. A Probation Period Happens During Employment
The tribunal noted that a probationary period can only take place once employment has started.
It therefore could not logically be a condition that prevented a contract from existing in the first place.
Why This Matters for Employers
This case is an important reminder that conditional offers of employment can still create legally binding contracts. If an employer withdraws an offer after acceptance, they may still need to provide notice pay.
Importantly, the tribunal confirmed that a nil notice period will not automatically be implied. In this particular case, the tribunal decided the employee was entitled to an implied notice period of three months.
This can create significant financial and operational risks for employers, particularly when recruiting senior roles.
How Employers Can Reduce Risk
When it comes to conditional offers of employment, employers should carefully review the wording used in offer letters and contracts. Possible approaches include:
Clearly State When a Contract Is Formed
Employers may wish to specify that no binding contract exists until all pre-employment conditions have been fully satisfied.
Include Notice Provisions Before Employment Starts
If employers want the ability to withdraw offers with minimal risk, they should clearly communicate any notice arrangements before the offer is accepted.
For example, they may choose to state that the contract can be terminated before the start date with one week’s notice.
Review Conditional Offer Templates
Many businesses use template offer letters that may not reflect current legal risks. Regular reviews can help ensure wording remains compliant and commercially practical.
Conclusion
Conditional offers of employment can provide important protection for employers, but this case highlights that the wording used is critical.
Simply labelling an offer as “conditional” does not necessarily prevent a binding contract from being formed.
Employers should ensure offer letters clearly set out when employment begins, what conditions apply, and what notice provisions will apply if circumstances change before the employee starts work.
If you would like support reviewing your contracts or recruitment documentation, our HR experts are here to help.
How The HR Booth Can Help
We understand that recruitment comes with a wide range of responsibilities. As well as finding the right candidate for your business, employers must also ensure they remain compliant throughout the hiring process.
We support our clients at every stage of recruitment, from drafting job adverts and managing candidate selection to providing tailored HR advice throughout the process. Our team can also help you stay compliant by preparing legally sound conditional offers of employment templates and advising on the correct steps to take if an offer needs to be withdrawn.
If you have any questions about the topics covered in this article, or you are looking for additional HR support with recruitment and compliance, our team is here to help.
