Getting the basics right: offers of employment

In HRNZ’s second of a series of articles on getting the basics right, Jack Rainbow, Associate at Dundas Street Employment Lawyers, outlines the importance of getting the offers of employment clear and correct.

Making an offer of employment, even verbally, is the first step in creating a legally binding employment relationship. If routine background checks are still pending, such as reference checks, a criminal record check, work-visa check, or a drug test, the employer must be clear about the conditional nature of the offer when it is being made.

WHO IS AN EMPLOYEE AT LAW?

Under the Employment Relations Act 2000, an employee is defined as any person of any age employed by an employer to do work for hire or reward under a contract of service.

The Act also extends that definition to include “a person intending to work”. A person intending to work is a person “who has been offered, and accepted, work as an employee; and intended work has a corresponding meaning”.

This means candidates who have accepted an offer are ‘employees’, and given their employment status, the employer cannot unilaterally withdraw the offer of employment once it is accepted, even if the employee has never stepped foot in the workplace.

WHERE IT CAN GO WRONG

In Lescure v Hoki Dental Ltd, Hoki Dental contacted Ms Lescure to ask if she was still interested in a position with the company, after Ms Lescure had previously inquired about a potential role with the company.

From there, she attended an interview and was advised that Hoki Dental would like to offer her the job. A draft contract was forwarded, and the parties exchanged questions and answers. Finally, Ms Lescure noted “everything looks perfect” and asked about changing the start date.

Subsequently, Ms Lescure was advised that circumstances had changed and Hoki Dental could no longer offer her the position. Ms Lescure raised a personal grievance claiming unjustified dismissal and took her case to the Employment Relations Authority.

The Authority found that she was an ‘employee’ because:

• Hoki Dental had made an offer of employment to Ms Lescure by sending the draft contract

• Hoki Dental did not specify any particular mode by which the offer could be accepted, and it was quite common for employment relationships to be formed without the formality of a signature

• Ms Lescure “unequivocally” conveyed her acceptance of the offer in her response (“everything looks perfect”)

• Ms Lescure’s request to change the start date did not undermine her acceptance of the offer of work, noting it was not uncommon for the parties to discuss the start date, without the formation of the employment relationship turning on that point.

The Authority found that Hoki Dental’s unilateral withdrawal of the offer amounted to an unjustified dismissal.

Similarly, in Blissett v Te Roroa Whatu Ora Trust, the Trust entered into discussions with its contractor (Mr Blissett) about making him an employee.

A committee was set up to negotiate the terms and conditions of Mr Blissett’s employment agreement, and Mr Blissett emailed a number of negotiation points he wanted to discuss.

The Board later decided not to proceed and withdrew the offer of employment. Mr Blissett raised a personal grievance claiming he had been offered employment in the Board meeting, and had accepted on the spot, and was therefore an employee.

The Trust disagreed, claiming that, while there was an original offer, Mr Blissett had made his own counter-offer by way of negotiation points, and therefore had not accepted the original offer of employment.

Mr Blissett took his case to the Employment Relations Authority, which found that he was in fact an employee who had been unjustifiably dismissed when the Trust withdrew the offer of employment, noting:

• an offer of employment can be accepted, even if the parties have not finalised a job description and employment agreement; and

• acceptance of an offer, can be communicated by words, actions, a combination of both, or even silence in some circumstances.

WHAT ABOUT CONDITIONAL OFFERS OF EMPLOYMENT?

Conditional offers of employment stipulate that the offer of employment is conditional on specific requirements being met. In some cases, these can be relied on by an employer to withdraw an offer.

In Edwards v Laybuy Holdings Limited, Laybuy Holdings Ltd (LBH) made Mr Edwards an oral offer of employment, noting that it would be subject to a number of pre-employment checks. He was then given a written offer of employment, which noted that the offer was “conditional upon satisfactory pre-employment checks specific to the role we’re offering you”.

LBH was not satisfied with the results of the criminal background check and subsequently informed Mr Edwards they were withdrawing the offer of employment. Mr Edwards claimed he was an employee who had been unjustifiably dismissed.

The Employment Court considered the legislative history of the definition of an ‘employee’. It noted that, in a general sense, the Employment Relations Act 2000 had departed from a strictly contractual approach to employment, with the emphasis being on the relationship between the parties. However, Judge Holden considered that the terms ‘offer’ and ‘acceptance’ had longaccepted legal meanings under contract law, and a contractual interpretation was necessary.

Ultimately, the Court concluded that no employment relationship existed. LBH had made it clear that the offer to employ Mr Edwards was conditional on its pre-employment checks being satisfied. Judge Holden emphasised that LBH had made it clear they did not intend to be bound to employ Mr Edwards, despite his acceptance of the offer.

TAKEAWAYS

It is important to note that these cases, like most employment law matters, turn on their facts, and in particular the wording of any offer of employment. Where an employer wants to make a conditional offer of employment, it must be clear to the prospective candidate that there is no intention to form a relationship until those conditions are met, and that the employer reserves the right to withdraw the offer should those conditions not be met.

Jack Rainbow is an Associate at Dundas Street Employment Lawyers. Jack has strong experience in industrial relations, dispute resolution and providing highlevel, strategic advice. He partners closely with his clients, providing advice and assistance from start to finish on a range of complex matters.