When making an offer of employment to a new member of staff, employers will often assume that it is conditional on the receipt of satisfactory references and possibly the completion of ‘right to work’ checks. But how often do employers properly document their position, and do they really know where they stand if the conditions are not met? The recent case of Kankanalapalli v Loesche Energy Systems Ltd provides an example of an employer who got things a little bit wrong.

Kankanalapalli v Loesche Energy Systems Ltd

Mr K’s job offer (which he was found to have accepted) was withdrawn shortly before he was due to start work as a Project Manager. The project in question had been delayed and the company no longer required his services. When Mr K subsequently brought a claim for breach of contract, the company argued that the requirement for satisfactory references and right to work checks were ‘conditions precedent’ to the formation of a contract. This meant that , if the company’s argument was right, no contract was formed until those conditions were met. As a result, when the job offer was withdrawn, there was not yet a contract of employment in existence for the company to have breached. However, following an appeal to the EAT, these requirements were found to be ‘conditions subsequent’; this meant that a binding contract had been formed, but if the conditions were not met, the failure gave rise to grounds on which the contract could be lawfully terminated.

To compound its problems, when making the initial offer of employment, the company had failed to include in its paperwork an agreed notice period. So having found that an employment contract existed, the EAT went on to imply into the contract a 3-month notice period, which it considered to be reasonable in the circumstances. Mr K was duly awarded the equivalent of 3 months’ pay in lieu of the period of notice the company had failed to provide when terminating the contract.

Where did the employer go wrong?

The company could have avoided these problems if it had more carefully drafted its offer of employment. If the company truly wanted to impose conditions precedent to the formation of a contract, it ought to have made this crystal clear. 

As it goes, perhaps the more obvious mistake for others to avoid was the failure to provide more comprehensive terms and conditions of employment when making the offer in the first place. In all likelihood, had a proper contract of employment been provided at the outset, it would surely have included an agreed notice period that might well have been much shorter than 3 months. After all, many contracts include a relatively short notice period (possibly a week or even less), which will often apply until the employee has successfully completed their probationary period. Had they included such a notice period in their paperwork, it would have been much easier and much cheaper to withdraw the offer when circumstances changed.

Need to review your employment offers?

If this case makes you wonder whether you need to review your offer letter, employment contract or other related paperwork, please get in touch. We’d be happy to help.