Can an employer withdraw a job offer?

The case of Kankanalapalli v Loesche Energy Systems Ltd is an important employment law decision from the employment appeal tribunal (EAT) that considers when a job offer becomes legally binding and what happens if an employer withdraws it.

Job offer subject to certain conditions

Mr Kankanalapalli was offered a job as a project manager by Loesche Energy Systems Ltd in 2022. The offer included key terms such as salary, role and a start date. However, it also stated that the job was ‘subject to’ certain conditions, including satisfactory references, a right-to-work check and completion of a probationary period.

Job offer accepted

Mr Kankanalapalli accepted the offer and began preparing for the role, including submitting documents and planning to relocate to the UK.

Employer withdrew job offer

Before Mr Kankanalapalli could start work, the employer withdrew the offer, citing delays to the project.

Claim to ET for breach of contract failed

Mr Kankanalapalli brought a claim for breach of contract, arguing that once he had accepted the offer, a binding contract had been formed, and the employer should have given him notice or compensation.

The employment tribunal (ET) rejected his claim. It decided that because the offer was conditional and the conditions had not yet been fulfilled, no binding contract existed at the time the offer was withdrawn.

EAT disagreed

However, the EAT disagreed. It stated that the key legal issue was whether the conditions in the job offer were ‘conditions precedent’, meaning no contract exists until they are satisfied, or ‘conditions subsequent’, meaning a contract exists but can later be ended if the conditions are not met.

Conditions subsequent

The EAT concluded that the conditions in this case were conditions subsequent. This meant that a binding contract was created as soon as Mr Kankanalapalli accepted the offer. The EAT emphasised that one of the conditions, that is, passing a probationary period, could only occur after employment had started, which supported the interpretation that the contract already existed.

Because a contract had been formed, the employer could not simply withdraw the offer without consequences. Instead, the withdrawal amounted to terminating the contract.

Reasonable notice

The next issue was whether the employer had to give notice. Since the contract did not specify a notice period, the EAT decided that a ‘reasonable notice’ term should be implied.

Taking into account factors such as the seniority of the role, the length of the recruitment process and the fact that Mr Kankanalapalli was relocating internationally, the EAT concluded that three months’ notice was reasonable.

Damages

As a result, the employer was found to have breached the contract and was ordered to pay damages equivalent to three months’ salary.

Key lessons for employers

This case provides several important lessons for employers:

• Conditional offers may still create binding contracts once accepted.
• Clearly state if conditions must be met before a contract exists.
• Use precise wording to avoid unintended legal obligations.
• Include clear notice provisions in offer letters.
• Withdrawing an offer can amount to dismissal, requiring notice or compensation.

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