An offer letter is a document provided by an employer that outlines the terms and conditions of employment. It is not a formal contract, but it confirms the details that were agreed upon during the hiring process, such as job title, salary, start date, benefits, and other key points.
Once an offer letter has been accepted by the candidate, both parties have indicated their intent to enter into an employment relationship. However, questions sometimes arise around whether an employer can revoke a job offer after it has already been accepted. There are a few key factors to consider in this situation.
What is an Offer Letter?
An offer letter is a document that outlines the basic terms and conditions of employment that have been offered to a candidate. It is provided after the hiring process is complete and the employer has officially extended an offer of employment.
Key details generally included in an offer letter:
- Job title
- Job duties and responsibilities
- Start date
- Salary and compensation information
- Benefits package
- Paid time off
- Any special terms of employment
The offer letter allows the candidate to clearly see what is being offered before formally accepting the job. It provides all pertinent details upfront so the individual can make an informed decision about whether to take the position.
Some key things to note about offer letters:
- Not a formal contract – Can be revoked under certain circumstances
- Sets expectation for employment relationship
- Includes all agreed upon terms and conditions
- Should be signed and returned by candidate to accept offer
The offer letter stage comes after the interview process and reference checks are complete. Once the candidate returns the signed letter, they have officially accepted the employer’s job offer.
When is an Offer Letter Binding?
In most cases, an offer letter becomes binding once the candidate signs and returns it to the employer within the specified time frame. This indicates that the individual has accepted the terms of employment outlined in the letter.
However, there are a few exceptions in which an accepted offer letter may not be fully binding:
- If the letter specifically states that employment is “at-will” and can be terminated by either party
- If the employment relationship is clearly just for a specified term or project
- If the letter contains a trial period or probationary language
These types of provisions allow the employer to terminate employment even after an offer letter has been accepted. Unless the letter expressly contracts both parties to an employment relationship for a set period of time, either party can generally walk away.
Additionally, an offer letter may not be binding if:
- The candidate provided false or misleading information during hiring
- The offer was extended by mistake
- Background check reveals issues not disclosed previously
So in most cases, an accepted offer letter sets expectations for employment. But employers still have options under select conditions to revoke an offer.
When Can an Employer Revoke a Job Offer?
There are a few scenarios in which it may be legally permissible for an employer to revoke a job offer, even after the candidate has accepted:
1. The Candidate Lied or Misrepresented Information
If it comes to light that a candidate intentionally provided false information during the hiring process, such as fabricating prior experience or skills, the employer can revoke the job offer. Intentionally withholding or misrepresenting information material to the hiring decision is grounds for withdrawal of the offer.
2. The Offer Letter Contains a Contingency
Sometimes an offer letter will include language making the offer contingent on something, such as completing a satisfactory background check. If the contingency is not met, for example failure to pass a background screen, the employer may revoke the offer.
3. The Employer Made a Mistake in Extending Offer
In rare cases, an employer may notice an error was made in crafting the offer, such as including incorrect salary, job duties, or even offering the job to the wrong person entirely. A genuine mistake could legally allow the employer to pull back the offer.
4. Material Information About Candidate Changes
If something major changes regarding the candidate’s situation from when the offer was first extended, such as losing an expected certification or degree, the employer may have grounds to renege on the offer.
5. Economic Circumstances Change
A dramatic change in the employer’s financial situation or ability to pay the offered wages, such as losing a major client or contract, may allow withdrawing a job offer in some cases.
6. The Role is Eliminated
In very rare cases, the employer may determine they no longer have the budget or need for the role at all after making an offer. This economic justification could potentially support revoking the offer letter.
However, employers should be cautious about revoking accepted offers and consult legal counsel before doing so. There can be legal risks involved if not handled properly.
Can a Candidate Withdraw After Accepting an Offer Letter?
The same basic principles apply in reverse for candidates. Once an individual accepts an offer letter, they have made a commitment to the employer and should honor that agreement.
However, candidates may still have options to withdraw gracefully from an accepted offer if handled appropriately:
- Notify employer promptly if reconsidering so they can pivot hiring efforts
- Be transparent about reason for change of plans
- Understand the employer may not look kindly on going back on acceptance
- Don’t accept other offers as leverage unless prepared to take one
- Review any employment contract carefully before resigning from current role
There are rarely legal restrictions on candidates withdrawing acceptance, but they risk burning bridges by going back on their word. Clear communication is key.
What are the Risks of Revoking an Accepted Offer Letter?
While there are some limited situations where an employer may be able to justifiably revoke a job offer, there can be significant legal and reputational risks involved:
- Breach of contract lawsuit if no contingencies or circumstances justifying withdrawal
- Discrimination complaints if decision was unfair or arbitrary
- Damage to employer brand, reputation and future recruiting
- Loss of time and resources invested in hiring the candidate
- Poor employee morale and trust in management
Any decision to revoke an accepted employment offer should involve careful review by legal counsel to avoid liability. Even if legally defensible, it may still create negative public perception of the company.
Best Practices for Revoking Job Offers
If an employer determines they cannot proceed with hiring after an offer has been accepted, some best practices include:
- Act swiftly to notify the candidate of withdrawn offer
- Be honest about why offer is being revoked
- Apologize for inconvenience caused to candidate
- Do not discuss with others, maintain confidentiality
- Consider offering some compensation for time or expenses
- Consult attorney to understand rights and risks
While an unpleasant situation, transparent communication and handling the process sensitively can still leave the door open to future consideration.
Key Takeaways
- An offer letter becomes binding once signed by candidate in most cases
- There are limited exceptions allowing employer to revoke offer
- Revoke early in process before candidate gives notice or relocates
- Rescinding offer risks legal action and reputational damage
- Candidates can also withdraw acceptance under certain conditions
- Open communication by both parties eases difficulties
While revoking an accepted job offer can get complicated quickly, being aware of the legal considerations helps both employers and candidates understand their rights and responsibilities. With sensitivity and care, an employment relationship that will no longer work out can be ended responsibly.
Frequently Asked Questions
Can an employer revoke a job offer just because they found someone better?
No, simply finding another more desirable candidate is not a valid justification for revoking an offer that has already been accepted. This could open the employer up to potential legal disputes.
When should an employer retract an offer letter?
The ideal window is after extending the offer, but before the candidate has formally accepted. Once the letter has been signed and returned, it becomes much more problematic legally to withdraw the offer without legitimate cause.
Is a verbal job offer legally binding?
No, a verbal offer without a formal written offer letter is generally not considered legally binding. However, revoking any offer could still create mistrust. Get all employment particulars in writing.
Can I sue if an employer withdraws a job offer?
You may be able to pursue legal action if you suffered measurable damages from relying upon an offer that was later revoked improperly. Consult an attorney to discuss the merits of potential breach of contract or discrimination claims.
Is a job offer letter enough without a contract?
In most cases, the offer letter is sufficient to cover the basic terms of employment that allow work to commence. Formal contracts tend to be used for more senior roles with complex compensation.
Conclusion
Revoking a job offer once it has been accepted can be a tricky situation for employers. While there are some limited conditions where it may be justified, extreme care should be taken to avoid legal disputes or damage to the organization’s reputation.
Candidates should also be thoughtful before withdrawing acceptance of an offer, and communicate clearly with the employer to preserve a positive working relationship if at all possible. With mutual understanding and transparency from both parties, difficult hiring situations can often be resolved amicably.
