Revoking an offer of employment is not necessarily a simple matter

By Tony Poland, LegalMatters Staff • Ending an employment relationship before it begins can come at a cost, says Toronto employment lawyer Ellen Low, adding employers would be wise to seek advice before making such a move.

In a recent judgment, Ontario Superior Court sided with a man who sued after a job offer was revoked before he had a chance to begin working. The court ruled he was entitled to three months’ notice.

Low, principal of Ellen Low Employment Law, says Kim v. BT Express Freight Systems, 317 ACWS (3d) 255 provides lessons for both employers and workers.

“If an employee is offered a contract of employment, they should have it reviewed in order to ensure they are protecting themselves,” she tells LegalMattersCanada.ca. “On the employer’s side, if you are contemplating the unenviable task of revoking an offer, I would recommend seeking advice to avoid damages and possible court costs.

‘Wrongful notice of the revocation’

“The employment relationship begins before your first day on the job. Even if there was no contract, which is increasingly uncommon, you could be liable for wrongful notice of the revocation of the offer.”

The court was told a company sought out a man after seeing his resumé on a job board. He was offered a position paying $30,000 more a year than his $50,000 salary along with the prospect of advancement within the company.

The man signed back a job offer then quit his job and another person was hired to replace him. However, days before he was to start, he received an email stating the employment offer was being “terminated/withdrawn.” Court heard it took him 10 weeks to find another job.

“I am sure the person was excited about the new opportunity but before he had the chance to begin, he was told, ‘Sorry, we don’t have a position for you.’ How do you protect yourself from losing a job before you even start?” Low asks.

She notes that although the man agreed to a three-month probationary period, court ruled that provision did not come into play.

In her judgment, Justice Gillian Roberts found that probation does not apply because the man “was never even given the opportunity to start the new job.”

Roberts ruled that the man had a valid employment contract.

Employment relationship

“Here the signed-back offer letter appears to contemplate a long-term employment situation,” she writes. “A valid employment contract creates an employment relationship even before any work begins. An employee is entitled to reasonable notice for breach of that contract and may sue for damage if appropriate notice is not given.”

The case mirrors one in which a senior bank manager learned the $180,000 job offer she received was being revoked two weeks before she was to start.

According to The Globe and Mail, the woman received a “terse letter, without even an apology” telling her an internal candidate would be getting the job.

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Low says claiming damages for a revoked job offer is not new.

“The last time there was a downturn in the economy this issue came up. I am not really surprised we are seeing this again,” she says. “Businesses are suffering economically because of COVID. Where an organization may have been in a position to hire based on 2019 revenue, they may be finding 2020 didn’t turn out as well as they were hoping. 

“Business numbers haven’t improved or may have gotten worse. Suddenly it may not look like a prudent decision to continue with a new hire and increase the headcount within the company.”

Settled out of court

“Anticipatory breach of contract” may not be uncommon, but it doesn’t get much publicity because an overwhelming number of employment cases are settled out of court, Low explains.

“There are very few employers who would genuinely want to have this type of claim publicized,” she says. “This is an issue that is ripe for some sort of early resolution.”

Low says legitimate reasons for rescinding a job offer can include if the employee made false representations during the course of the interview or made false representations about qualifications or employment or educational history. 

To protect themselves from wrongful dismissal claims, she says employers can strengthen their offer of employment letters.

“The letter can include clauses that are conditional, such as the company raising a certain level of funding or hitting certain benchmarks within the organization, and only once those things are achieved will the offer be made firm,” Low says. “Employees should also protect themselves when receiving a job offer by getting qualified legal advice because there many different moving parts to employment law.”