The term ‘gazumping’ is usually reserved for the property world, where a seller accepts a higher offer on their property after already agreeing to a previous offer. However, the term is now haunting HR departments, which are seeing new hires leave at short notice, or not turning up at all, because they’ve received better offers of employment.
Following the end of the furlough scheme, the jobs market is facing a major boom, with a reported record number of job vacancies and an increasing number of workers on payroll.
This has placed workers in a relative position of strength, with employers struggling to compete to attract both skilled and unskilled workers. A buoyant jobs market is leading workers to expect more from prospective employers, both in terms of higher wages and more intangible incentives such as flexible or hybrid working, and around health and wellbeing.
What can an employer do if they are gazumped?
Employers may have legal recourse where candidates renege on their acceptance of employment offers, or do not give adequate notice. However, they must consider the practicalities of such legal action.
Where an employee has signed a contract and begun working, they are required to provide adequate notice of termination when they resign. It is open to the employer and employee to agree to a shorter notice period so long as any changes are otherwise compliant with the contract (eg, a provision requiring any changes need to be made in writing).
The employer can try and persuade the employer to stay, for example by offering a wage increase, but if the employee is determined to leave, the employer may let them go sooner if their unwilling presence may cause further issues.
Where an employee leaves in breach of contract (by failing to give adequate or any notice) the employer cannot physically restrain the employee from leaving, however they may wish to take legal action if, for example, their early departure causes them financial harm. The employer may also want to take enforcement action if they suspect, by taking up new employment, the employee would be in breach of their confidentiality obligations or post-termination restrictions.
The employer will need to consider the cost and effort it would take to sue the employee, what objective they are trying to achieve by suing the employee, and the likelihood of that legal action succeeding, especially if the employer is alleging a breach of post-termination restrictions. The employer may be seeking damages from the employee, or an injunction to stop an employee for working for a competitor, for example. But they are realistically unable to force the employee to work for them again.
The employer may also be able to take action against the new employer if, for example they can demonstrate they induced the employee to breach their post-termination restrictions.
If the impact of the individual leaving the business is minimal it’s likely it won’t be worth the employer’s time to pursue them for breach of contract. But this will depend on individual circumstances and a number of key factors, such as the employee’s role within the company.
Where the employee has not yet started working or signed an employment contract but merely indicated a verbal agreement or an intention to sign, the position becomes more difficult.
The question of whether verbal acceptance or acceptance of an offer letter is sufficient must be taken on a case-by-case basis. The employer will need to scope out what basis the offer was accepted by the candidate and whether they set any conditions on their acceptance. They will also need to consider the terms of the offer letter and proposed contract which may indicate, for example, that the terms do not come into force until certain conditions are satisfied or on a certain date and so there may be no breach by the employee ‘gazumping’.
How to minimise the risk of gazumping
Often the best way to minimise the risk of gazumping is simply to be an attractive place to work, including offering a fair wage and good working conditions. This can help to decrease the risk of being gazumped.
Employers should be open to having honest and transparent conversations with employees about their concerns and needs to minimise the risk of current employees leaving without adequate notice. They should offer that same honesty and transparency to candidates and new joiners who may be receiving numerous offers of employment at the same time. This could include wider policy changes, for example offering higher annual leave entitlements, or smaller financial and non-financial incentives and perks.
However, that is not always sufficient, and employees may gazump for reasons not related to pay, benefits or working environment. Whether an employer decides to enforce the contract of a gazumping employee will depend on numerous financial, legal and practical factors and it will not always be straightforward. Businesses may need to accept that job gazumping is a feature of the current jobs market and will need to factor that into their recruiting practices.
Daniel Zona is an associate in the employment law team at Collyer Bristow