A&L Goodbody LLP
  October 7, 2005 - Ireland

Revoking an Offer - When an Employer Changes It's Mind
  by Barry Walsh

Many employers have been in the potentially tricky and somewhat uncomfortable situation of having to withdraw an offer of employment before commencement. The ordinary principles of contract law apply here. Where an employer withdraws an offer, especially after formal acceptance, a breach of contract claim could arise, at least in theory. Additionally, if an offer was withdrawn after a medical condition or drug use came to light during a pre–employment medical, employment equality claims can arise on the disability ground which could be very costly for the employer, both financially and for its reputation. However, taking certain safeguards can limit the employer’s exposure to legal claims. Conditional Offers Best practice suggests that employment offers should be written and specified as strictly conditional. Typically, the conditions that can be required before an employment relationship is formed include: Medical confirmation that the applicant is fit for work Satisfactory references and / or background checks. Signing of formal employment contract containing the full terms and conditions. Where the occasion demands an employer can of course make a verbal offer so long as the preconditions are clearly mentioned. Ideally that verbal offer should be quickly followed up in writing. A suitably worded conditional offer (whether verbal or written) should protect an employer from most situations where it subsequently needs to withdraw that offer due to such conditions not being satisfied. Contractual claims If a prospective employee is being “poached” or is re-locating specifically to take up a new position, both sides should take extra care to ensure that any pre-employment requirements are satisfied before the target employee resigns the existing position or takes relocation steps. Individuals making breach of contract claims would enjoy a court’s sympathy where they were persuaded to leave stable employment or otherwise adversely adjust their position (e.g. sell their house) only to find the offer was subsequently withdrawn. In many cases though the stakes will be more modest especially where an applicant comes through the normal recruiting procedure. The forum for contractual claim is the civil courts with all the associated formality, cost and delay and this would deter a lot of potential claimants. In any event, the employer might be able to argue that damages (if any) should be limited to the notice entitlement the employee would have had if they had started the new employment. This can be very modest, a month or even a week. Unfair dismissal claims will generally not arise as the “employee” will have insufficient service. Disability claims Pre-employment medical examinations and drug tests can potentially raise issues of disability discrimination under the Employment Equality Acts. Disability is very broadly defined by the Acts and has been held to include alcoholism. It is acceptable to withdraw an employment offer if the medical reveals that an employee is medically unfit for the work. However, an employer cannot refuse employment just because a disability (which does not actually prevent the person from working) is identified. No pre conditions can save an employer here. Indeed, the Acts require employers to make reasonable accommodation to allow people with disabilities to work. No length of service is required by applicants in these cases and the Equality Tribunal can impose potent financial and other sanctions where breaches occur. References and Background Checks The use of employer references has changed somewhat in recent years. A duty of care is owed to a future prospective employer as well as the employee by someone giving a reference. There is no guarantee that references will remain confidential as they can often be sought by the subject through a data protection request. This has made many (particularly large) employers reluctant to give any written reference beyond a standard “Statement of Employment” type reference whether the employee was good, bad or indifferent. These simply state the period of employment and position held. Referees should even be careful with “off the record” requests for their views. In reality, therefore, it is less common for a reference to cause a prospective employer to withdraw an offer. If an existing employer becomes aware (through a reference request to it) that its employee had applied elsewhere, that would not normally give it good grounds for disciplinary action against that employee where the underlying offer was subsequently revoked. More recently many employers have started conducting pre-employment background checks to ensure applicants are of good repute and have no convictions. This can especially occur in financially regulated employment. Employers should have express consent from applicants before checks are made. In Ireland there is no publicly available central criminal conviction register and it can be difficult to carry out thorough searches. Again however, once any employment offer is suitably conditional upon obtaining satisfactory results of references or checks, that offer can in most cases be withdrawn if information comes to light which causes the employer to think twice.


Read full article at: http://www.algoodbody.ie/news/load.asp?date=05/01/2006&file=PUB%3A1144