In the world of HR, the ubiquitous disclaimer "subject to references" is often viewed by employers as an escape clause, one which allows them to withdraw an offer at any time before “Day One”. However, a recent ruling has clarified that a conditional offer can become a binding legal contract long before an employee even steps into the role.
Mr. Swamy applied for the post of project manager and was formally offered the role "subject to receipt of satisfactory references, a right-to-work (RTW) check, and a successful six-month probation period". Mr. Swamy formally accepted the offer via email, provided the contact details of his references, and submitted his RTW documents. Loesche Energy Systems Ltd. (Loesche) then advised Mr. Swamy to seek a 12-month rental, as he was initially to be based in the UK. However, only weeks before he was due to start, Loesche informed him that their own client contract had been delayed and that they were "no longer able to offer" the position as specified. Mr. Swamy brought a claim for breach of contract, arguing that a binding agreement had existed, one which entitled him to notice pay.
The Appeal Tribunal sided with Mr. Swamy, finding that the offer letter had contained all the essential terms in terms of salary, hours, start date, and probation period. Crucially, as a probation period can only be initiated after employment begins, it was logical to view the entire package as a concluded contract, and thus Loesche did not have the unrestricted right to withdraw. By failing to provide sufficient notice, they had effectively breached the contract.
As the written contract was silent as to how much notice was required, the Tribunal had to infer a term of "reasonable notice". Despite Loesche’s attempt to argue for a "zero-day" notice period (or a statutory minimum of a week), the Tribunal determined that three months was the only reasonable term given the request that Mr. Swamy secure a 12-month rental property.
This ruling carries significant weight for anyone involved in recruitment, given that employees are now protected from “Day One” after they accept a clear offer, even if "onboarding" checks are in progress. If an employer withdraws an offer for reasons unrelated to background checks, such as a change in business fortunes, then significant damages can be awarded based on an implied notice period. Thus, employers should rigorously review offer letters and pre-employment correspondence and cannot rely on "standard terms" that the candidate has not seen. To avoid any unexpected liability, employers must be explicit about notice periods during the pre-start phase and understand that, once an offer is accepted, a legal "point of no return" has been crossed.
