Article: What the law says when your employer withdraws your job offer

Employee Relations

What the law says when your employer withdraws your job offer

While Grofers is dealing with legal notice sent to them by agitated students whose job offers the company retracted, here's what the law has to say about it.
What the law says when your employer withdraws your job offer

The most coveted and pleasing words an ardent job seeker can ever hear is –“We're pleased to offer you a position with us," but all goes in vain when these dreaded words slay the excitement, "We unfortunately will have to withdraw our offer of employment."

The latest Indian e-commerce company, Grofers revoked the job offers of the students who were placed on campus. Not long before, this year in May, Flipkart deferred job offers to about 15 IIM-A students and because of this event IIM campuses have threatened them to blacklist from recruiting companies. Flipkart was also in the news recently for plans to let go over 700-1000 underperforming employees. But deferring job offers and revoking/withdrawing offers are different. 

Another recent example this year would be, L&T Infotech which has withdrawn offer letters from 1,500 students based in South India. Agitated students undertook one-day hunger strike to protest against the corporate giant L&T Infotech. As per them repeated promises of employment  were made by the company for 18 months and now they have suddenly decided to revoke their offer. 

Prashanth Verma, assistant vice-president, marketing at Grofers, said, “We have revoked 67 offers in total. We are making some strategic changes in the company. We are downsizing because of the market environment and revised growth projections. So, these changes have been made and we are no longer able to give the offers we had made.”  

These repeated scenario of retracting jobs by employers have impacted the morale of future job-seekers in the market. So, what do you do when a prospective employer offers you a job but pulls the rug under you?

The legal side of Ignominy 

Here is what our legal system has to say on arbitrary decisions taken by companies to withdraw job offers abruptly.  As per Section 5 of the Indian Contract Act, 1872- 

"A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. —A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards."

The job offer once accepted becomes a basic legal contract between you and your new employer and when your employer withdraws that offer then it falls under ‘Breach of Contract’. Normally the contract once made cannot be unilaterally revoked. Only both parties can discharge each other from obligation by novation /accord and satisfaction.

"Acceptance and intimation of acceptance of offer are therefore both necessary to result in a binding contract. In the case of a contract which consists of mutual promises, the offeror must receive intimation that the offeree has accepted his offer and has signified his willingness to perform his promise. When parties are in the presence of each other, the method of communication will, depend upon the nature of the offer and the circumstances in which it is made." Bhagwandas Goverdhandas Kedia vs M/S. Girdharilal Parshottamdas (1966 AIR 543, 1966 SCR (1) 656)

So, if an employer rescinds a job offer, candidates can sue the employer for damages, if losses have been suffered. The court looks into your case and if it finds your contract was breached then it can order your employer to pay you damages or compensation. 

How should employers handle rescinded job offers?

From the legal perspective, the employer should notify the individual as soon as it becomes aware of it. Section 6 Of The Indian Contract Act tells us the requisites of revocation of contract. One needs to   communicate to other party and if there is lapse of time in accepting the offer then contract can be revoked. Another reason is if acceptor fails to fulfil conditions precedent to acceptance. 

Section 6 - “Revocation how made.—A proposal is revoked— —A proposal is revoked—"

  1. by the communication of notice of revocation by the proposer to the other party;
  2. by the lapse of the time prescribed in such proposal for its acceptance, or, if no time is so prescribed, by the lapse of a reasonable time, without communication of the acceptance;
  3. by the failure of the acceptor to fulfil a condition precedent to acceptance; or
  4. by the death or insanity of the proposer, if the fact of his death or insanity comes to the knowledge of the acceptor before acceptance.”

Therefore, employers should do everything best possible to address the concern of the individual.  They should help the employee to find another job inside or outside their company. As repeated rescinding offers might blemish reputation of the company. In future it might be difficult for them to hire bright talents into their company. They need to consider the ramifications of revoking job offers and do whatever to minimize the negative results of the outcome. 

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Topics: Employee Relations, #Corporate, #HR Ready

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