Claire Paton gets legal guidance this week from Sarah Bird, employment law expert at Browne Jacobson and Martin Brewer, a Partner with the employment team of Mills & Reeve on how to make a u-turn on a verbal offer of employment.

The question:
If I have made a verbal offer of employment and the individual has accepted it can I withdraw that offer? I accept that I have entered into a verbal contract but no written offer was made.

Claire Paton

The answers:
Sarah Bird, employment law expert, Browne Jacobson

It is correct that if an unconditional offer of employment has been made by an employer and clearly accepted by the prospective employee the employer cannot normally unilaterally withdraw it. This is the case whether the offer has been made verbally or in writing.

The difference with a verbal offer is that it is harder for the prospective employee to produce evidence of the offer made and any terms that go with it. Therefore in this situation the prospective employee could potentially bring a claim of breach of contract if you were to withdraw the offer, but they would have to show that a contract had been properly formed and the terms agreed.

This may prove difficult, especially if you did not discuss all of the terms and conditions of employment when the offer was made. As the employer you would be liable to pay any losses incurred, which is restricted to the earnings and other benefits the prospective employee would have earned during their notice period with you.

If this was not agreed a court will impose a reasonable period of notice. If other crucial terms such as pay or start date have not been discussed and decided on, the court will probably say that no enforceable agreement has been reached.

You must be aware that if the reason for the withdrawal is discriminatory, for example on the grounds of their sex, race, religion or belief, disability or sexual orientation there may be claims under discrimination legislation.

In practice, I would suggest telephoning the prospective employee and explaining that unfortunately you are going to have to withdraw the offer of employment and you should do so as soon as possible.

Sarah can be contacted at: sbird@brownejacobson.com

Martin Brewer, is a Partner with the employment team of Mills & Reeve

Claire, an offer which is made with the intention that, if accepted, it becomes binding cannot be withdrawn unilaterally for the simple reason that, if it has been accepted it is no longer an offer. Once an offer made in these circumstances is accepted you have created a contract.

One question might be whether you have an unconditional contract or if the offer was conditional. For example, you could make a verbal offer which sets out all of the essential terms of the offer which, if accepted, completes the agreement. However, you may make an offer ‘subject to references/medical’ etc. Thus even if this conditional offer is accepted there is no final agreement.

What is the effect of this? First if you have made, and have had accepted, an unconditional offer then you have created a binding contract of employment. This will have to be terminated in accordance with its terms (for example by giving notice or pay in lieu). In theory the statutory dismissal procedure will apply but in the absence of a right to make a claim for unfair dismissal this becomes irrelevant.

Second, if you have a conditional contract you are not necessarily off the hook. You cannot, for example, get out of making a conditional contract unconditional by failing to do something you promised to do (such as take up references). In these circumstances the ’employee’ would have a claim.

You could, of course, chance your arm and simply say that you are withdrawing the offer and see whether a claim is made for say breach of contract. If it is you could settle for the notice pay.

Martin can be contacted at: martin.brewer@mills-reeve.com

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