However, the case of Kankanalapalli v Loesche Energy Systems Ltd highlights that in some cases a conditional job offer, once accepted, may still give rise to a binding contract of employment.
Background
In September 2022 the claimant was offered a project manager role with Loesche Energy Systems Ltd ("LES") with a start date of 1 November 2022. The offer was subject to satisfactory references, a right-to-work check, and completion of a successful probationary period. The claimant accepted the offer via email. He provided details of references and subsequently, on 6 October, emailed documentation evidencing his right-to-work in the UK.
On 7 October, LES advised the claimant that there had been a delay and he would not be needed until January 2023. He was asked to confirm if this was acceptable. The claimant did not accept this change. He confirmed he had booked flights for himself and his family and sought confirmation of what payment he would receive during November and December when he was not working. In response LES withdrew the job offer.
The claimant presented a claim for breach of contract to the employment tribunal arguing that the job offer had been withdrawn without appropriate notice. LES responded arguing that the conditions of the offer had not been satisfied by the date it was withdrawn. The tribunal concluded that the contract was subject to two conditions - the receipt of satisfactory references and the carrying out of the right-to-work check. It found that neither condition had been satisfied. Although the claimant had supplied details of referees and emailed copies of right-to-work documentation, the conditions would not be satisfied until the references were received and the original, hard-copy, right-to-work documents were provided. As the offer was still conditional, there was no binding contract between the parties and no need for notice. Even if there was a binding contract, the tribunal found that it was implied that as the claimant had less than one month's service, LES would not be required to give any notice, this being the statutory minimum requirement, and they had in fact given him a week's notice.
Employment Appeal Tribunal judgment
The claimant successfully appealed. The Employment Appeal Tribunal ("EAT") found that the employment tribunal had been wrong to:
- assume the conditions in the contract were conditions precedent and not conditions subsequent (a condition precedent is a contractual term that requires something to happen before the contract is enforceable whereas a condition subsequent is an event that, if it occurs, terminates an already existing contract);
- fail to consider whether LES were in breach of an obligation not to withdraw the contract before the conditions were met (irrespective of whether they were conditions precedent or subsequent);
- identify a reason for the withdrawal that the respondent had not actually relied upon; and
- imply that no notice was required given the short service of the claimant.
At the request of the parties the EAT went on to determine the case. The EAT concluded that the conditions were conditions subsequent to the formation of the contract, not precedent. While this may seem like a surprising conclusion in relation to the references and the right-to-work check, the EAT took into account:
- a statement made in the document seeking the details of the references that the employment "may be terminated without the provision of satisfactory references"; and
- the grouping of the conditions for references and right-to-work checks with the condition relating to the probationary period, which could only be a condition subsequent.
Having concluded that a contract existed, the EAT went on to consider the notice period. It found that reasonable notice in the circumstances of the case would be three months, and that LES was in breach by terminating the contract without reasonable notice.
What should employers be doing?
This decision highlights the importance of clarity and careful drafting of a conditional offer. Simply stating that an offer is "subject to" certain checks may not prevent a binding contract being formed. Employers can:
- make clear that pre-employment checks such as references and right-to-work checks are conditions precedent;
- expressly state that no contract arises until the specified conditions are satisfied;
- where an initial offer letter is sent with a contract to follow, include notice provisions. Specify if shorter notice provisions are to apply during a probationary period; and
- review current templates to ensure the intended legal effect is achieved.
