When can you legally rescind a job offer?

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You found an applicant who you thought would be the ideal fit but something’s changed – can you do anything about it? HRM asked a leading employment lawyer about the implications of retracting a job offer.

“Essentially, yes, you can rescind a job offer,” says Carl Blake, “but only until it has been accepted.”

The Simpson Grierson senior associate says that, once a job offer is accepted and a binding contract has been formed, then it can’t be rescinded – even if the employee hasn’t yet started work.

“In order to have a binding contract you need offer, acceptance and certainty of terms,” explains Blake. “The biggest potential area of dispute or conflict is whether there is certainty of terms because an employee may verbally accept and offer but if it doesn’t contain details such as salary or other core terms, then there is an argument that there hasn’t yet been a contract formed,” he continues.

According to Blake, a number of different contractual elements can constitute ‘fundamental terms’ – including salary, bonus and periods of leave, among other things.

“Really, it’s anything that will impact someone’s back pocket,” he clarifies. “Not absolutely everything would have to be agreed but certainly the core terms would.”

So what would happen if an employer tried to take back an offer that had already been validly accepted?

“That would be regarded as a termination of employment,” reveals Blake. “The impact would be that there’d be no justification to dismiss the employee effectively and – as odd as it sounds – that could actually happen before someone has even started work.

“You can technically be dismissed before you’ve even started work because the Employment Relations Act defines an employee as someone who’s intending to work,” he continues. “That means if you’ve accepted an offer of employment and you don’t start for another month, you’re still an employee under the act.”

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