Withdrawal of Job Offer Was Breach of Contract, EAT Rules

The drafting of an offer of employment can be crucial in determining whether its acceptance leads to the creation of a legally binding contract. Recently, the Employment Appeal Tribunal (EAT) ruled that a man's acceptance of a job offer had created a binding contract that the employer had breached by terminating it without reasonable notice (Kankanalapalli v Loesche Energy Systems Ltd).

The man had applied for a job as a project manager. He was offered the position subject to the receipt of satisfactory references, a right to work check and a successful six-month probationary period. He would need to relocate, and his employer agreed to provide £3,000 towards relocation expenses and suggested he look for a 12-month rental in the UK, where he would initially be based. He confirmed that he would be accepting the offer.

The employer subsequently informed him that his start date would be delayed by about two months. He replied that he had already booked flights to the UK for himself and his wife and asked what pay he would receive for the two months when he would not be working. The employer never sent him a written contract of employment, and he brought an Employment Tribunal (ET) claim for breach of contract, claiming that the offer had been withdrawn without appropriate notice.

The ET found that he had accepted the offer, but that it was conditional on the receipt of satisfactory references and the carrying out of a right to work check. As neither of those conditions had been satisfied, the offer had still been conditional when the employer withdrew and there was therefore no binding contract. Alternatively, had there been a contract, it would have contained an implied term that, as he had less than one month's service, the employer was not required to give him any notice. The man appealed to the EAT.

The EAT found that the ET had clearly proceeded on the basis that the conditions were precedent to the contract coming into existence. The ET had erred in not considering and determining the man's argument that the conditions were subsequent to the contract beginning.

With the agreement of both parties, the EAT determined the case itself rather than remitting it to the ET. The EAT accepted that the conditions were conditions subsequent. One of them – the satisfactory completion of a probationary period – could only occur after the contract had started. All three had been grouped together and there had been no attempt to differentiate between them as conditions precedent and subsequent. The EAT considered that, on the evidence, all of them should be interpreted as conditions subsequent.

The parties were agreed that three months would be a reasonable notice period for the role. The employer argued that less notice should be required during the probationary period. However, the EAT noted that the man had travelled to a different country, the position was a senior one and the employer had suggested he take on a 12-month rental. The EAT considered that three months was reasonable notice, and found that the employer had been in breach of contract by failing to give such notice.