In the world of recruitment, the phrase "subject to references" is often viewed by employers as a safety net, one which allows them to withdraw an offer at any time before a candidate’s first day. However, a recent landmark ruling by the Employment Appeal Tribunal (EAT) has sent a clear message to businesses and professionals alike—a conditional offer can become a binding legal contract long before the employee steps into the office.
Background:
The claimant applied to the respondent for the post of project manager and was offered the job on 23 September 2022. The offer explicitly stated it was "subject to receipt of satisfactory references, a right-to-work (RTW) check, and a successful six-month probation period". The claimant accepted the offer via email, provided the contact details of his references, and submitted his RTW documents. The respondent suggested that the claimant look for a 12-month rental as he would initially be based in the UK.
However, just weeks before he was due to start, the company informed him that their own client contract had been delayed. Consequently, they stated they were "no longer able to offer" the position for the original start date. Mr. Swamy brought a claim for breach of contract, arguing that a binding agreement existed and that he was entitled to notice pay.
The core of the legal battle rested on a technical, yet crucial distinction in contract law, specifically whether the conditions in the offer letter were "conditions precedent" or "conditions subsequent". A condition precedent acts as a barrier in that the contract does not even exist until the condition is met. A condition subsequent, however, means the contract is formed immediately, but it can be terminated later if the condition is not satisfied.
Decision:
The EAT overturned a previous ruling and sided with the claimant. The Judge found that the conditions were indeed "subsequent". Key to this decision was the fact that the offer letter contained all the essential terms in terms of salary, hours, and start date and included a probation period. Since a probation period can only be initiated after employment begins, it was logical to view the entire package as a concluded contract. The Court ruled that Loesche Systems did not have an unrestricted right to withdraw. By failing to provide notice, they had effectively breached the contract.
As the written contract was silent on how much notice was required before the start date, the Court had to imply a term of "reasonable notice". Despite the company’s attempt to argue for a "zero-day" notice period or a statutory minimum of one week, the EAT determined that three months was the only reasonable period. This took into account the seniority of the project manager role, the lengthy recruitment process, and the fact that the company had encouraged him to secure a 12-month rental property for the move.
Implications:
This ruling carries significant weight for anyone involved in high-level recruitment. For employees, it confirms that you are protected by the common law from the moment you accept a clear offer, even if the "onboarding" checks are still in progress. If an employer withdraws an offer for reasons unrelated to your suitability—such as a change in their own business fortunes—then you may be entitled to significant damages based on an implied notice period.
For employers, the case is a stern warning to review offer letters and pre-employment correspondence. The Court made it clear that "reasonable notice" is assessed at the time the contract is made and not months later during a legal dispute. Relying on "standard terms" that the candidate has not seen yet will not protect a business. To avoid unexpected liability, employers must be explicit about notice periods during the pre-start phase and understand that, once an offer is accepted, a legal "point of no return" has likely been crossed.
