Revoking an Offer of Employment Can Result in Liability for Employers

There are a number of reasons why an employer may have to terminate one of their employees, especially during the ongoing uncertainty caused by the COVID-19 pandemic. The employee-employer relationship is based on an agreement between the two parties. It is important for employers to understand that this relationship is, in essence, a subset of contract law and determining the date that the contract began is essential for assessing liabilities associated with terminating the contract.

As a result of employment agreements being contracts, employers must be aware that contracts can be binding and result in legal obligations before an employee even begins to work for the employer. That is, the date of creating the employment contract and the date of employment does not have to be the same. If an employer provides an offer of employment to a potential employee and the employee accepts that offer, there is a binding employment contract.

Courts have accepted that once an employment contract exists, the employee is entitled to reasonable notice for breach of the contract if appropriate termination notice is not given, even before they start working. As a result, employers must be certain that they would like to hire a prospective employee before extending an offer of employment.

Employers are not permitted to simply “cancel” a contract for employment without consequences before the employee starts to work. In such cases, the employee who accepted an offer of employment will be entitled to damages in lieu of notice of termination. The factors used to determine appropriate damages are those that apply to all employment matters, such as age, length of service, availability of similar employment etc. Courts will also consider whether the employment offer contemplated a long-term employment position. Employers should be particularly aware of this risk when hiring an employee who would be leaving a former job to accept the new offer. This is because the prospective employee is giving up current employment, which results in losses for them and potential damages for the employer if the contract is revoked.

Usually, if an employment contract contains a probationary period that permits an employer to terminate the employee within a certain amount of time, the employer will not be liable for terminating the employee during that probationary period. Employers should be aware that they are not entitled to rely on probationary periods to avoid having to pay employees whose contract was revoked before they began working. The reason for this is that if the employee was terminated before they began work, the probationary period never began.

If you have questions about how to avoid employment law liability for your organization, contact Walker Law’s employment litigation lawyers for a consultation.

Please note that this article is intended for information purposes only. It is not intended to provide legal advice. If you have any specific questions, please contact a lawyer.

Tags: Employment Litigation Law, Contract Disputes, and Civil Litigation Law

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