Legal

Is a job offer letter a contract?

26 Sep 2019 By Pam Loch

In some circumstances, employers can be successfully sued for breach of contract for withdrawing an offer, as Pam Loch reports

So you have completed the recruitment process and identified the person for the role. The next step is to make them a job offer. Once the offer is accepted you have a binding contract, as long as the terms on offer are clear.

On the other hand, if you make a verbal offer during the interview, or over the phone, you have no protection against the individual ‘gazumping’ you for a better offer, or simply disagreeing later down the line about the terms they accepted. To be able to rely on the acceptance, you need to follow up with a written offer, confirming the terms on offer and then accepted in writing ideally too. 

I’ve made an offer, but I've changed my mind

What happens if after you have made an offer, you change your mind and want to retract it? If you have an offer and acceptance then you risk a breach of contract claim being successfully made, depending on what was contained in your written offer. If you have made the offer conditional, you may find you can rely on the conditions to withdraw the offer.

The most common scenario when this happens is when you have offered someone a job and you receive a less than positive reference from their former employer. If you have made the offer conditional on satisfactory references, you are entitled to withdraw the offer without recourse. 

Job offers should always be conditional, for example, on receiving two satisfactory references as a minimum, but you may also want to consider Disclosure and Barring Service checks if applicable, or providing certain qualifications. You can only employ someone if they have the right to work in the UK, so you could include this as a condition, but in any event you would be entitled to withdraw the offer as you cannot lawfully employ them. You also need to ensure you are not withdrawing the offer for a discriminatory reason (for example, they have told you they are pregnant), otherwise you are risking a successful employment tribunal claim against your business. 

If the offer was not conditional, or the individual has satisfied the conditions and you have still changed your mind, you need to be careful as you could be exposed to a breach of contract claim. 

How can I avoid making an offer I regret? 

It’s best to only make an offer when you are sure they are the right person. There are steps you can take during the recruitment process that can help you do that – from having a clear job description and person specification, and carefully designed interviews and assessments, to using reference checks and screening services. You should also verify documents and qualifications, and carry out social media checks – as long as this is part of your recruitment privacy policy. 

Once you are at the stage of making an offer, make it conditional on meeting your requirements; for example, on receiving satisfactory references or evidence of qualifications. This gives you objective reasons for being able to withdraw an offer without risking a successful claim against your business. 

Pam Loch is managing partner at Loch Employment Law and managing director at Loch Associates Group

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