What does an employer need to know if they are withdrawing a job offer?

Employers can spend a lot of time recruiting for a role so withdrawing a job offer is generally a last resort but it can be necessary on occasions.

Frequent reasons we advise on often include:

• The requirements of the business have changed; and/or
• The offer was made conditional on certain checks, such as receipt of satisfactory references, and these conditions have not been met; and/or
• Information is received regarding the applicant which casts doubt on the desirability of employing them.

Withdrawing a job offer is not without risk and can give rise to stand alone claims, as we go on to discuss below. The process will be different depending at what stage in the process the withdrawal takes place.

Withdrawing an offer before acceptance by the applicant

An offer of employment, like all contracts, can be withdrawn any time before it has been accepted by the applicant. In order to rely on this the employer will need to have clear evidence it withdrew the offer before the applicant had accepted it. Ensuring that the offer letter sets out exactly when the contract is formed between the parties and ensure it is clear how and when an applicant can accept any offer is very important here.

The employer will still need to have clear documentary evidence that demonstrates why the offer was withdrawn to assist with defending any claims that the applicant may attempt to bring as a result of a withdrawal.

After acceptance by the applicant

After the applicant has accepted the offer of employment, and after all conditions of the offer have been made, then it is highly likely an employment contract will be in existence.

In circumstances where the employer needs to terminate the contract the only way in which they can do so is via giving the notice of the employer as set out in the contract of employment. Failure to do so can result in a breach of contract claim – see potential claims below.

Withdrawing an offer as conditions have not been met

Any offer of employment which is subject to conditions needs to be made clearly to the applicant otherwise the employer may not be able to rely on them to withdraw the offer of employment. If your letter of offer has been properly drafted, this will take place before acceptance.

Conditions of employment commonly include:-

• Receipt of references that are satisfactory to the employer;
•  Confirmation that the applicant has the right to work in the UK/has the correct immigration approvals;
•  Receipt of a medical report or completed medical questionnaire which is satisfactory to the employer;
•  Evidence that the applicant holds the relevant qualifications or other requirement, such as a professional registration, required for the role;
•  Confirmation that they are free from any restrictions from previous employment that would prevent them from starting work as proposed by the employer;
•  If required for the role, confirmation that they are not subject to any restrictions that would prohibit them from holding office as a director; and
•  Receipt of background checks as required for the role e.g. DBS Checks, Financial Background Checks, etc.

If the above conditions have not been met then it is most likely a contract of employment has not been formed. Where employers frequently get into difficulties with regards to any conditional offers is where they encourage applicants to resign from their current role pending these checks/conditions and where discussions occur verbally that may supercede any written offer – i.e. stating in a phone call that references were “ok” and so the applicant considers the offer is now no longer subject to conditions however, upon review in more detail by a senior manager concerns are raised regarding the reference contents.

To avoid this, it can be helpful to make it clear in the offer letter that the employee cannot consider the offer to have been confirmed until this has been done in writing and that oral discussions cannot be accepted as part of the process, as well as training managers involved in recruitment not to make promises over the phone, and ensure all letters go through HR or someone with authority.

Once these conditions are confirmed as met then a contract of employment has been formed, even if a start date is not agreed as noted above.

Potential Claims

As we set out above, there are stand alone claims which can arise from withdrawing an offer of employment, which is why it is important to be careful when undertaking recruitment. Potential claims are:

1. Unfair dismissal – frequently new recruits are external applicants but for any internal promotions, and where employees have over 2 years continuous service, be aware of any consequences of withdrawing a job offer which results in a dismissal as the employee may have a claim for unfair dismissal. It is also possible to breach the duty of trust and confidence here by offering and withdrawing an offer, which could result in a constructive dismissal claim.

1.  Discrimination – an applicant has a right to bring claims for discrimination under the Equality Act 2010 if they consider that they have been subjected to discrimination during a recruitment and selection process.

 This can include discrimination on whether to interview the applicant, offer the applicant a role and the terms on which employment is offered. A withdrawn offer is more likely to generate scrutiny than someone who simply did not make it through the process, and it is important to be sure the reasons for withdrawal are not, in fact, discriminatory.

 Areas in the recruitment process that often attract claims for discrimination include:

•  Withdrawing a job offer after references indicate high levels of sickness/absence

 The reasons for the absence could be the employees own disability or it could be discrimination by association – where they care for someone who is disabled and this has resulted in higher absence levels.

 Time off as the individual has primary child care responsibilities also can give rise to sex discrimination claims.

•  Withdrawing a job offer following medical reports and questionnaires

 In the first instance it is essential to know that, except in some very limited circumstances, you cannot request any medical information regarding medical information prior intending to offer the applicant work or a role.   This does not include specific questions as to whether an applicant requires reasonable adjustments to the interview process and, any questions of this nature should be limited to the adjustment required, not the reason for the requested adjustment wherever possible.

 We always recommend considering carefully whether a medical questionnaire is required. Medical information is considered highly sensitive under GDPR and must be stored and processed in a specific way – also ensure you have provided the applicant with a Privacy Notice for processing and storing this data.

 Withdrawals of job offers due to medical disclosures tend to attract disability discrimination claims and we strongly urge caution before any offer of employment is withdrawn without seeking legal advice noting recent case law in this area where the threshold for a disability was fairly low –https://blog.bridgeehr.co.uk/articles/legal-update-low-threashold-for-disability . An applicant should always be seen by a medical practitioner or Occupational Health assessor if there are concerns regarding their suitability for the role for medical reasons. This assessment should consider whether there are any reasonable adjustments that can be made to the role in order for the employees to complete it.

•  Withdrawing a job offer because of concerns regarding right to work in the UK without properly ascertaining the correct legal status

Where an applicant has the right to work in the UK and this is checked via one document then this is an easy process for an employer.   However, where an applicant has the right to work in the UK but the employer must complete additional steps to ascertain this right to work it can be off putting. But simply refusing to progress the application because of this additional work can in itself potentially be discrimination on the grounds of race.

As you can see from the above withdrawing a job offer is not always straight forward and can give rise to claims. Ensuring any decision making is completed fairly, consistently and in line with the law will help manage any risks of claims as well as documenting carefully the same.

What can employers do to protect themselves?

 There are steps which you can take during recruitment which protect you against these claims.

 Steps you can take to minimize your risk are:

1.  Formally document their reasons for withdrawing an offer and retain documentary evidence which will support their decision-making process;
2.  Make it a practice to discuss with the applicant any negative outcomes before making any decision. Obtaining further information is essential not only to the decision-making process but also to managing the risk of any claims;
3.  Use carefully drafted Letters of Offer covering many of the points above;
4.  Ensure that the applicant knows that they should not resign from their current role until they have had written confirmation that any conditions of their offer of employment have been met.
5.  Use probationary periods to limit contractual notice periods in the early stages of the contract to reduce potential claims.