We’re revealing common HR myths and setting the record straight for employers and business owners. In this series so far we have looked at the Three Strikes and You’re Out Myth, and debunked the myth that Employees can only take Annual Leave after 12 Months.
Another common myth that many people believe is that if an employee hasn’t started yet, and the employer changes their mind about the job, it’s ok to cancel their offer of employment.
Why cancelling an offer of employment is risky for businesses
While there may be good reasons to cancel an offer of employment – perhaps their reference checks were concerning, or the business needs have changed and the role is no longer available – unfortunately, if an offer of employment has been made, and the prospective employee has accepted the offer, then you have entered into an agreement.
Even if the employment contract document itself hasn’t been signed yet, when an offer is accepted and there were no conditions based on references or satisfying other pre-employment requirements, then the business is in a position to honour the contractual agreement.
In some cases, withdrawing the offer could be interpreted as breaking a contract and the prospective employee may be able to claim for damages, such as a loss of earnings, especially if they’ve already given notice or finished at their previous employment.
How can an offer be withdrawn without risking a costly payout?
Timing is so important when recruiting, and we often act in haste if we believe we’ve found the right person! First though, we recommend that all pre-employment checks are completed before making any offer – verbal or written.
If it’s necessary to make an offer to secure that ideal candidate, it is important to communicate that the offer is based on certain reasonable requirements being met, and remember these must be relevant to the role.
If there are circumstances out of the employer’s control leading to the position no longer being available, then it may be required to pay the candidate at least the statutory notice period. Businesses may be able to reduce any risks of a costly claim by communicating the reasons to the would-be employee and agreeing (in writing) to a reasonable outcome.
If a business decides to retract the offer for another reason, such as a poor reference or because the employer becomes aware of past offences through a police check, then we recommend getting in touch for advice around potential risks and the best course of action for the specific situation.
Cornerstone can assist employers to better understand and navigate the complex workplace laws in Australia. If you require assistance with recruitment, employee management, or any other HR matter, don’t hesitate to get in touch with our team, via the chat box here or calling us on 08 6150 0043.
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