Can an Employer Rescind a Job Offer?

What are Wrongful Resignations?

Have you been offered a job but now your employer wants to rescind that offer? – You may be entitled to financial compensation.

There are several reasons why an employer would want to rescind a job offer. For instance, an employee may have been hired before a period of economic downturn, and as a result the employer no longer has the budget to pay the employee. Another instance is if the job offer was conditional and the employee did not meet the conditional requirements or if the employer has just cause to fire the new employee. An employer who rescinds a job offer may be liable to pay damages to the employee. In this case, the employee would be considered wrongfully dismissed and would therefore be entitled to contractual damages or termination pay in lieu of reasonable notice. The law treats an employee whose job offer was rescinded the same as any employee who worked and was terminated from employment at the same company. This is to deter employers from breaching the employment contract at will.

Damages Based on a Fixed-Term Contract

The damages for the rescission of a job offer will vary based on the type of employment contract. If the employee is hired with a fixed-term contract, the damages they will be entitled to will be outlined in the employment contract. A fixed-term contract is when an employee is hired for a definite period of time or to carry out a specific task. If an employee is terminated before the expiration of the fixed-term, they will be awarded damages for the breach of that contract, as stipulated by the termination clause. In the event that there is no termination clause or severance provision, the employee will be awarded the balance of the fixed-term. Fixed-term contracts bring about a degree of certainty to the employee that the employee will be able to obtain a salary and benefits and will not have to search elsewhere for employment. When an employer rescinds that contract, they are taking away that certainty. Consequently, there is a general consensus among Canadian Courts that employers should have to pay the employee salary and benefits that the employee would have received, had the offer not been rescinded. The employee in this case does not have a duty to mitigate their losses by seeking alternative employment.

Damage for an Indefinite Contract

Conversely, if an employee is hired with an indefinite contract, and the employer rescinds the offer, then the employee is entitled to common law reasonable notice. The Court will assess the Bardal Factors to determine the employee’s reasonable notice period. These factors are the character of the employment, length of service, age and availability of similar employment, considering the experience, training and qualifications of the employee. When an indefinite job offer is rescinded, the employee has a duty to mitigate his or her losses by seeking alternative employment elsewhere. The Courts will take all of these factors into account when calculating the damages that the employee is entitled to for the breach of the employment contract. In some cases, the employee may be entitled to severance pay.

In Kim v. BT Express Freight Systems, a 2020 case from the Ontario Superior Court, Mr. Kim was offered a job by BT Express Freight Systems while he was still working at his previous company. Mr. Kim quit his job to commence employment at BT Express Freight Systems, but several days before he was to commence employment, BT rescinded the offer. Mr. Kim was no longer able to return to his previous job so he sued BT for damages. The Court determined that BT was liable to pay slightly less than three months of what would have been Mr. Kim’s salary and a portion of his legal costs. The court in Kim v. BT Express Freight Systems stated that: “A valid employment contract creates an employment relationship even before any work begins. An employer is entitled to reasonable notice for the breach of that contract and may sue for damages if the appropriate notice is not given”.

When an Employer Would Not Have to Pay Damages

There are a few instances where an employer would not have to pay damages to the employee for rescinding the employment offer. These are: if the employee did not meet the conditional job requirements, such as reference checks, the employee lied in his application, or the employer had just cause to fire the employee.

When an employee is offered a job, the employer is expressing an intention to be bound by that contract. Breaching that contractual obligation is a violation of the employee’s rights. Furthermore, this leaves the employee with uncertainty with regard to how he or she will earn income. The employee would not have been left with this uncertainty had the job offer not been rescinded. Because of these considerations, employees will be entitled to damages from the employer.

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