Hired Then Fired: What is the Law?

In recent months, more heads have rolled at Washington’s White House than an average episode of Game of Thrones. Or a reality-TV version of House of Cards perhaps?

Whichever your choice of box-set, it appears that President Trump’s trigger-happy habit for ‘firing’ his staff has transcended his television career into his presidential term.

The most recent dismissal of the liberal-tongued White House Communications Director, Anthony “the Mooch” Scaramucci, occurred after he had spent fewer than 10 days in his post.

The straight-talking former Wall Street financier commenced his role with a series of heated interviews and he then called a reporter to launch a profanity-laced attack on his former colleagues.

The President’s Chief of Staff, Reince Priebus, and press spokesman, Sean Spicer, both then left their posts after Mr Scaramucci’s appointment.

The White House reported that President Trump was unhappy with Mr Scaramucci’s performance so new Chief of Staff, General John Kelly, then dismissed him within 24 hours of being sworn in…are you keeping up?!

Incidents of employees taking an instant dislike for new colleagues are not uncommon. Staff members will usually take exception to a boisterous co-worker if they fail to communicate sensitively or suggest changes without causing offence.

Leaving aside the numerous discriminatory remarks made by Mr Scaramucci during his brief tenure, what else can we take from this latest episode in an employment law context?

Interestingly, his post as Communications Director was not actually supposed to commence until 5th August 2017. Effectively, he was dismissed before his official start date.

The United States Government is certainly not the first employer to soon regret hiring a member of staff and seek to terminate the engagement early.

Employers can lawfully withdraw an offer of employment or terminate a contract before a new member of staff begins. This may happen for a variety of reasons – including financial restrictions, a downturn in business or an organisational restructuring.

Yet, what is the legal position when a business wishes to withdraw an offer of employment after it has been accepted by a candidate?

The situation can be particularly difficult, especially if a prospective employee has already resigned from their existing employment in anticipation of starting with your business.

A company’s options will vary, depending on the circumstances and timing of the withdrawal.

 

Conditional Offer – subject to satisfactory references

The simple scenario occurs when an offer is made to an applicant, on the basis that their references turn out to be adequate and satisfactory. If requesting a reference following an offer, businesses should make sure that it is made clear in writing to the prospective employee that the job is being offered subject to the business being happy with the references provided.

If a reference is unfavourable, then the business is entitled to freely rescind their offer of employment.

However, employers should note that it is unlawful to refuse a candidate or withdraw an offer for any discriminatory reason. For example, rescinding an offer because you are notified you of an applicant’s disability and absence record could lead to tribunal claims under the Equality Act 2010.

 

Withdrawal before acceptance

Businesses will usually be able to identify difficult personalities and problematic individuals at the interview stage. However, if you do make an offer to a candidate which you immediately regret, you should communicate the withdrawal of that offer as soon as possible before it is accepted – either verbally or in writing. That will avoid a candidate claiming that a binding contract has been formed.

 

Offer accepted and/or contract has been signed

The matter becomes more complicated once an unconditional offer has been accepted or satisfactory references have been received. If there is a clear consensus between the parties that a contract has been agreed, then the prospective employee could have various claims if you then seek to terminate this agreement before the commencement date.

Contrary to popular belief, it is not essential that a contract has been signed by both parties in order to form a binding agreement – although it does help prove there was an agreement in place.

A contract of employment should ideally contain a clause which includes a probationary period. An employer can terminate an employee’s contract with notice, subject to the wording of that clause during the probationary period.

Further, if their contract is terminated before its commencement date, a prospective employee will clearly not have acquired the sufficient 2 years’ service necessary to raise an unfair dismissal claim in the Employment Tribunal.

However, the candidate may argue that this constitutes a breach of contract, especially if they have resigned from a previous role in order to accept your offer.

In most situations, a company should then pay the individual at least their contractual notice period in lieu. This will usually only be one week for more junior employees or during a probationary period. That will avoid the risk of a wrongful dismissal claim for notice pay.

For businesses in England and Wales, the intended employee may also bring a claim against the business on the legal principle of ‘equity’. Effectively, the potential employee could argue that they have suffered a financial suffered detriment if they resigned from a position in reliance on the agreed contract with your business and had formed a reasonable expectation of employment.

It is important to be aware that English Courts have historically granted compensatory awards to disappointed candidates on this basis.

 

Conclusion

In the case of Mr Scaramucci, he commenced his role prior to his official start date. Note that once an individual starts performing their duties, they become an employee already from that date regardless of what may be written in the contract.

While commencing litigation against the Trump Administration, may require a thick skin and deep pockets, claimants in the UK are now able to lodge proceedings in the Employment Tribunal free of charge.

It is therefore paramount that businesses are mindful about how, when and why they terminate any contract of employment – including before an employee starts.

So the next time you realise you have just recruited a disruptive ‘upstart’ into your business, consider your options carefully before the litigious ‘front-stabbing’ begins…

 

Gavin Macgregor is one of our expert Employment Lawyers, please contact him at info@lochlaw.co.uk or give our lawyers a ring on 01892 773970 for any further information or employment law advise. To find out more about Loch Employment Law’s services please click here. 

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