And speaking of calming behaviour brings me to the somewhat stressful case of Kankanalapalli v Loesche Energy Systems Limited in which the ET and then the EAT tussled with the complex area of whether notice pay is required when withdrawing an offer of employment.

Mr Kankanalapalli applied for the post of project manager with Loesche Energy Systems Ltd and received an offer of employment letter in September 2022 with a 01 November 2022 start date.  The letter requested he return a signed copy of the letter together with the referee contact form and new starter information form. It stated that the offer was subject to satisfactory references, right to work checks being completed and successful completion of a six month probationary period. A contract of employment was to follow. There was no mention of any notice periods for either party.

Mr Kankanalapalli responded with a query about relocation expenses as he was concerned about the shortage of rental properties available. In response, he was encouraged to take a 12 month rental and Loesche agreed to pay £3,000 of expenses — repayable if he resigned within 12 months of joining.  Mr Kankanalapalli accepted the offer, agreed the terms and indicated that he would sign and return the documents in a few days.

When the future employer had funding withdrawn for the project on which he was to work, Mr Kankanalapalli was asked to defer his start date to 03 January 2023. He said that he was unable to do this as he had already booked flights to the UK for himself and his wife. He then queried what he would be paid for November and December when he would not be working.

In response the employer withdrew that offer and replaced it with one that was conditional on the project going ahead. No written contract of employment was ever sent.

Mr Kankanalapalli rejected this proposal and brought a claim for breach of contract. He argued that the offer had been withdrawn without notice and that amounted to a breach. Loesche argued that the offer had not been accepted (offer and acceptance being key components of contract formation) and the conditions had not been satisfied at the point of withdrawal — so no contract existed which required notice to terminate.  Loesche also maintained that either there was no agreed notice or that Mr Kankanalapalli had been given reasonable notice — one week — which was consistent with its standard employment terms.

The Employment Tribunal concluded that the offer had been accepted.  Even though the claimant had not complied with the respondents instructions he had communicated that he accepted the offer.  However the offer was subject to two conditions — the provision of satisfactory references and completion of right to work checks — and neither had been complied with at the point of withdrawal, so no contract was in existence.  It went on to say that if it was wrong on that point then there was an implied term in the concluded contract that with less than one month's service no notice would be required.

Mr Kankanalapalli appealed to the EAT and the EAT considered whether the conditions were ones which applied after the contract began (conditions subsequent) or ones that needed to be met for a contract to be formed in the first place (conditions precedent).  If they were conditions precedent then the fact that they had not been met would mean that there was no contract to bring to an end and no notice requirement.

The EAT concluded that the ET had been wrong in their decision; that the conditions were conditions subsequent and that meant that the contract had already been concluded and notice would be required to terminate the relationship.

It referenced the detailed nature of the offer letter, covering as it did start date, salary, hours of work, job description, holidays, bonus and pension.  The claimant had been given all the documents needed to prepare for his first day and arrangements had been put in place for his security pass to be issued.  The three conditions included completion of his probation period which would clearly only be possible after he had started work and because there was no attempt to distinguish conditions precedent and conditions subsequent all three together would be considered subsequent.  A contract of employment had been formed and notice would be required to terminate the relationship even if it was expressed as withdrawal of an offer.

That then left the question as to how much notice was required.  Both parties agreed that post-probation the reasonable notice would be three months.  Loesche argued that it should be shorter during the probationary period, stating that its standard terms provided for one week’s notice during probation, but that was not communicated to the claimant on recruitment.  The EAT’s view was that the implied term was one of ‘reasonable notice’  rather than a specified period.  The Employment Rights Act 1996 provides minimum notice periods which includes zero notice in the first month but that is a minimum threshold and not a definition of reasonableness.

To determine the appropriate reasonable period the respondent’s usual practice was not relevant; what was relevant was the claimant’s situation.  The EAT took into account that the claimant was travelling to a different country for work; that the respondent had recommended that he take a 12 month rental and offered £3,000 relocation expenses on that basis and determined that the appropriate period in this case would be three months even during the probationary period.

This case highlights the importance of being clear about all terms even in the offer letter. If you want to be able to withdraw an offer on certain grounds you should set out how and when you might be able to do so  It also underlines the importance of being clear about notice periods and in practical terms considering whether to negotiate a payment on withdrawal rather than face the costs of litigation through ET and EAT.