An employer makes a job offer, the contract is signed (but not returned) and salary negotiations are underway. Suddenly, the company retracts the offer. Do verbal and written agreements constitute a solid deal? Two HR Zone members offer very different advice. Read on…
Kam Bains says the retraction is legal:
It seems doubtful that a binding contract has been formed. You have not formally accepted the offer of employment, and there is a lack of certainty over one of the major terms i.e. amount of salary. Given this, the new ’employer’ is able to lawfully revoke the job offer even though you have submitted your resignation and clearly intended to accept the new job.
If a binding contract has been formed, then withdrawing the job would amount to a breach of contract and you could take legal action to recover the financial losses flowing from that breach. However, the amount of damages you could recover would be very limited by virtue of the fact that your new employment, in theory, could be lawfully terminated by giving due notice after you had commenced working.
It seems that your best option is to try to retract your resignation from your current employer. However, they are under no obligation to allow that retraction.
Peter Stanway says the offer is a binding contract:
You have a binding contract if you emailed to accept the job and have resigned on the strength of it.
If you are still negotiating salary and have not signed the contract but this will be fact dependent and you certainly have an arguable case for a contract and loss resulting.
The extent of that loss is a grey area but there is a view that they would have been better off waiting for you to start and then following the notice provision rather than terminate before you start.
You need to mitigate your loss – try to persuade them to honour their offer, try to persuade your current employer to let you stay, and look for a new job (and keep proof).
***
View the original post:
Withdrawing an offer
***
3 Responses
Acceptance
The explanation of the situation does not state the employee accepted the offer. It appears to be a verbal conditional acceptance based on the salary being acceptable.
If we look at it from the employers point of view, if the acceptable salary expectations of the candidate were higher than the employer could afford, could they have sued the candidate for not starting to work for them by claiming they had a “contract”. I feel this is highly unlikely.
It could be acceptance was made, but the description clearly does not indicate anything other than a contract was signed but unreturned. Had it been signed and already in the post at the time of retraction I would agree that a contract was formed. By not returning it we can summise that the candidate was awaiting completion of negotiations to return the contract, knowing he/she could withdraw at any point.
Resignation from an existing job before negotiating a salary in the newly offered job was a risk the candidate took. We are not told if candidate made the employer aware of his/her resignation. They may not have been made aware as this would have disadvantaged the candidates salary negotiations.
Reading between the lines, the contract is likely to have contained a salary amount. It wouldn’t have been omitted or a space left blank for the candidate to fill in after successfull negotiations. My educated guess is that the candidate was holding on to the contract (therefore not accepting it) whilst trying to negotiate one with a higher salary.
From what information we are given, my opinion is – no contract.
Regards Steven
Legal position
My basic understanding of law is that for a contract you need both offer and acceptance. The paper contract being sent out is the offer, we are not told that acceptance took place.
An unreturned contract and negotiations over salary seem to point to the contract not been accepted by the potential employee at the time it was withdrawn.
It is a binding offer – but you can retract
Peter is right – a legal contract has already been entered to even though some details are still outstanding. Therefore, there could still be a claim for costs. However, the contract should include a notice period for terminating the contract so to mitigate any costs, the notice period should be given and paid in lieu.