Posted on 10 January 2017
You make a verbal job offer to someone, which is duly accepted, then, during the period of time between the offer being made and the date of start (due to the prospective new employee having to work notice at their current employers) things change within your business and what seemed like a good recruitment decision, no longer seems so wise. You decide you can no longer proceed with the recruitment.
What are your obligations?
Since it was only verbal, you can write to the prospective employee saying that you have changed your mind and no longer require them to start as discussed, thank them for their interest and wish them well for the future.
You write advising them you have changed your mind and no longer will be proceeding with the job, and pay them the notice that they would have been entitled to had they started work.
The second answer is correct. Once the offer you make to a candidate is accepted (and once any conditions that the offer was subject to have been satisfied), a contract exists between you and the future employee, irrespective of whether your offer was only made verbally.
The critical difference between the two answers is of course, that the correct answer potentially involves making a payment to the individual concerned. As there is in effect, already a contract in place between the parties, you are legally obliged to pay them in lieu of the notice that they would have been entitled to on the first day of their employment. This may be quite short, as it is likely that the employee would have been on a probationary period. The normal notice during a probationary period is either 1 week or 1 month. Under current legislation it could potentially be nil for the first month if that is what you have agreed or indeed, in the absence of any agreement or formal contract being discussed, the statutory notice obligations would apply, in which case, there is no payment due, as the first four weeks of employment under the statutory provisions do not require any notice to be given.
Whilst the law requires employees to be issued with a written Statement of the main terms of employment within 2 calendar months of commencement of employment, this kind of situation may be one reason why it is wise for you to issue such terms to the prospective employee at the time when you make a job offer (or soon after), as it makes the terms clear to both sides. Having a shorter notice period during the probationary period, may be appropriate and indeed has benefits to you as the employer in managing the early period of employment.
Of course, from the prospective employee’s point of view, your decision not to proceed may be much more traumatic. They are likely to have resigned from their existing job and be working their notice. Their existing employer is under no obligation to allow them to retract their notice, and indeed is unlikely to wish to retain an employee who had wanted to leave them.
Of course, these circumstances occur very infrequently, however it is advisable to understand your obligations as an employer and be wise to the impact such decisions may have.