How verbal job offers can be legally binding
There’s a widespread perception that verbal job offers aren’t worth the paper they’re not written on – in other words, get it in writing or it’s not legally binding. However, a recent Employment Tribunal case has left a company out of pocket because it believed that an Englishman’s word was not necessarily his bond.
The case was that of McCann v Snozone Ltd. The employer had a number of maintenance engineer vacancies that it wanted to fill and had asked an employment agency to find suitable candidates. Mr McCann was one of those put forward by the agency and underwent two interviews. After the second one, he was contacted by the agency and a verbal job offer was made, which he accepted.
He subsequently got a phone call saying that Snozone were pleased that he had accepted their offer, and that he would receive a written contract by the end of that week.
This didn’t happen and he contacted Snozone to find out where the contract was. It was at that point that Snozone said there had never been an offer of employment, either verbally or in writing.
Understandably, McCann was not pleased about this and he took them to an Employment Tribunal for breach of contract.
The tribunal’s decision
The tribunal agreed with him, saying that the job had been offered and accepted by McCann, meaning that a contract existed. Once that had happened, the tribunal said, it could only be terminated by giving notice as laid out in the terms of the contract.
Since Snozone had terminated the contract without notice, McCann was entitled to damages for breach of contract.
If there was no mention of notice in the terms, the tribunal said that it was a question of reasonableness. McCann was awarded damages which were equivalent to one month’s salary at the midpoint of the annual salary range for the company.
When is a binding contract of employment formed?
This happens when an applicant accepts an unconditional offer of employment. If a conditional offer is made, the contract exists from the point at which those conditions are satisfied.
As long as it was the intention of both parties to the contract to enter into a binding agreement when they were speaking, this is sufficient grounds to say that a contract exists.
If the decision is made not to proceed with the recruitment process and the offer is withdrawn, the employer may be liable for a claim for breach of contract. The candidate may then be entitled to damages. These will most often be in the form of net salary and benefits that the candidate would have received during their notice period.
What should employers do?
If possible, employers should put their job offers down in writing as soon as possible after a decision has been made. A written offer should set out:
Starting date/continuous service date if transfer to another part of the business
Title or brief description of job
Wage, salary, bonus, commission or other basic payments
Any preconditions such as a medical report or reference that needs to be satisfied
Length of probationary period and what will take place during this time
Sickness rights and entitlement to sick pay
Normal hours of work and additional hours and whether or not this is paid
The notice required to terminate employment
What the applicant needs to do in order to confirm their acceptance of the offer (the employer should state that unless specified actions are completed, the offer will not be treated as accepted).
If the text of the letter will be treated as part of the contract of employment.
When a job offer is made, whether in writing or verbal, the details of the offer made need to be both accurate and precise. This is because, as has already been stated above, the employer is entering into a contract with the applicant and any details that are included in the offer are contractually binding – salary, benefits, amount of annual leave, discounts provided.
The probationary period
Many employers make offers of employment which are subject to the successful completion of a probationary period. A probationary period allows both the new recruit and employer time to see whether or not s/he ‘fits in’ in terms of job and existing team.
It is essential that the probationary period is specified. The job offer should state that employment can be terminated during the probationary period. If this is not stated, then the employer may still be liable to pay the employee for the whole of the period, even if the employee is dismissed during that time.
Preconditions of Offer
It is often sensible to make any offer of employment subject to certain provisions:
Obtaining references that are satisfactory to the business.
Production of relevant documents for eligibility to work in the UK (a Legal Requirement).
Production of documents e.g. driving licence, proof of professional/trade qualifications, proof of membership of professional body, certificates.
Completion of Credit Reference Checks, Criminal Records Check if applicable to role.
In this situation, even if the applicant accepts a conditional offer, there is no final agreement until the stipulated checks have been carried out.
It is important to bear in mind that the reason for the withdrawal of the offer should not be related in any way to a protected characteristic:
Marriage and civil partnership
Pregnancy and maternity
Religion or belief
If it is perceived by the candidate that any of these may have played a part in the withdrawal of the offer, a claim of discrimination could be made, which can lead to considerably higher compensation, currently uncapped under European law.
Employers should take care that any decision on withdrawal of an offer is rigorously documented so that any claim of discrimination can be disproved should it progress to the tribunal stage.