Conditional job offers and termination

A conditional job offer created a binding employment contract which required reasonable notice to terminate it.

Background

K, an overseas candidate, was offered a Project Manager role on 23 September 2022, ‘subject to receipt of satisfactory references, a right to work check and a successful six-month probationary period’. He accepted by email on 26 September, booked flights to the UK for himself and his wife, provided new starter information, referee details and right to work documents, although he did not return a signed copy of the offer letter.

On 11 October 2022, the employer withdrew its offer, citing project delays. K brought a claim for breach of contract, arguing that the offer had been accepted and could not be withdrawn without notice. The employer argued no binding contract had ever been formed because the conditions had not been satisfied.

A tribunal dismissed K’s breach of contract claim, ruling that because the ‘conditions precedent’ (references and right to work checks) were not yet fully satisfied, no binding contract existed. Alternatively, if a contract had existed, it contained an implied term that as K had less than one month’s service no notice was required and the employer had in any event given one week’s notice. K appealed.

EAT decision

The appeal was allowed.

At issue was whether the conditions attached to the offer were ‘conditions precedent’ (preventing a contract from forming until satisfied) or ‘conditions subsequent’ (allowing a contract to exist but capable of being terminated if not met).

The EAT held that this is a matter of construction in each case and that here the tribunal had erred by failing to engage with K’s argument on this point.

The tribunal had made two errors. Firstly, it failed to consider that the conditions might be ‘subsequent’ rather than ‘precedent’ (barriers to a contract forming). Citing the inclusion of the six-month probation clause - which can only operate after employment starts - the EAT ruled the conditions were indeed subsequent. A binding contract had been formed upon acceptance. The offer letter contained the essential contractual terms, and onboarding steps were already underway ahead of K’s start date, including arrangements for a security pass. Importantly, the wording on the referee form read ‘I understand that my employment may be terminated without satisfactory references’ rather than stating that no contract would come into existence until references had been obtained.

Second, while the contract was silent on notice, the law implies a term of ‘reasonable notice’. Reasonableness must be assessed at the time the contract is entered into. Given the seniority of K’s role, the cross-border relocation, and the employer’s suggestion of a 12-month rental, the EAT implied a three-month notice period. The employer’s failure to provide that notice amounted to a breach of contract. The EAT ordered the employer to pay three months’ notice to K.

Comment

Once a job offer is accepted, a ‘conditional’ label does not give employers an unrestricted right to walk away without possible consequences.

A binding contract of employment can be formed and be enforceable even before the employee's first day of work. Here, K’s email stating ‘Please take it that I accept the offer’ was sufficient to create an enforceable contract, and the employer's response, ‘That is excellent news and we look forward to you joining us’, reinforced this.

If an employer wants to make sure no contract exists until all checks are completed, the offer letter must clearly say that. Simply listing conditions in an offer letter as being ‘subject to’ various requirements will not necessarily achieve this.

Employers should also ensure that notice provisions are expressly agreed at the outset, particularly for senior or international roles, to avoid the implication of potentially lengthy notice periods. It is normal for notice periods to be shorter during the probation period and if this had been specifically set out in the letter then that shorter period would have been the notice required.