By Jo Seery, Professional Support Lawyer
Background
Mr Sita Rama Swamy Kankanalapalli was offered a project manager role with Loesche Energy Systems on 23 September 2022. The offer set a 1 November start date and stated that employment was “subject to receipt of satisfactory references, a right to work check and a successful six-month probation period which will start on your start date”. On 26 September he accepted the offer. Loesche replied, “that is excellent news and we look forward to you joining us.”Mr Kankanalapalli later provided reference contact details and his right to work documents which Loesche acknowledged on 6 October 2022. He did not sign the offer letter. Before he could start, the employer withdrew the offer, stating that they were no longer able to offer the position of project manager on the agreed start date and making a conditional offer based on a notice to proceed.
Mr Kankanalapalli brought a claim for breach of contract claim which was dismissed by the Employment Tribunal. The Tribunal found that the offer remained conditional and no binding contract had been formed. In the alternative, it held that even if a contract existed, there was an implied term that as he had less than one month’s service the employer was not required to give him notice.
Breach of contract
The central issue in the appeal concerned whether the Tribunal had wrongly treated the conditions in the offer letter as conditions precedent — preventing a contract from forming — rather than conditions subsequent, which assume a contract exists but allow it to be terminated if the conditions are not then met.
The claimant also argued that the employer did not have an unrestricted right to withdraw the offer and that it was wrong to rely on the case of Wishart where an offer had been withdrawn because the employer considered the reference unsatisfactory whereas in his case no reference had been provided. Furthermore, the tribunal erred in its approach to implied notice.
Key Issue
Outcome
The EAT upheld the appeal. It held that the Tribunal had failed to consider the claimant’s argument that the conditions were conditions subsequent, despite this being raised in submissions. Taking into account the particular terms the EAT agreed that the offer letter set out all the key terms, the start date, the hours of work, the job description, holidays, bonus, pension etc. Moreover, the EAT considered that the offer letter made clear that one of the terms required completion of a satisfactory probationary period which was clearly a condition subsequent. There was no attempt to differentiate the other terms of the offer and as such all three were conditions subsequent.
In relation to the notice the Tribunal erred in implying a notice period started at zero by relying on a contractual term for another employee which was not relevant. Given there was no discussion about a notice period at the time the contract was formed it was necessary to imply a term of reasonable notice. Taking into account seniority of the role, the relocation involved, and the employer’s own suggestion that the claimant secure a 12‑month rental, three months’ notice was reasonable. The employer was therefore in breach of contract by terminating without reasonable notice.
Claims for holiday pay and relocation expenses were rejected, as holiday entitlement had not begun to accrue and the relocation payment was only payable once employment commenced.
Why this matters
The judgment is an important reminder that conditional job offers can still create binding contracts. It will be important for unions and prospective employees to carefully consider the terms of the offer and whether the conditions can only be satisfied after a contract has been formed. Furthermore, in the absence of any discussion about notice at the time the contract is formed it is necessary to imply a term of reasonable notice – what is reasonable will depend on all the circumstances of the case. Job applicants who resign from previous roles or relocate in reliance of an offer may therefore have enforceable rights if the offer is withdrawn.
It is therefore important to understand the terms of any offer, keep written records of all communications, and seek advice promptly if an employer attempts to withdraw an accepted offer.
