EAT finds conditional job offer created binding contract with three months’ implied notice

Background

In the case of Kankanalapalli v Loesche Energy Systems Ltd, the claimant was offered a role as a project manager, subject to satisfactory references, a right to work check and a six-month probation period. He accepted the offer by email and began taking steps in preparation for the role, including providing documentation and making arrangements to relocate.

Before the proposed start date, the employer withdrew the offer due to a delay in the underlying project. The claimant brought a breach of contract claim, arguing that the offer had been accepted and could not be withdrawn without notice.

The Employment Tribunal found that, although the offer had been accepted, the conditions had not been satisfied. It treated those conditions as preventing a binding contract from arising and, in any event, concluded that no notice was required.

EAT decision

The EAT allowed the appeal and substituted its own decision.

A key issue was whether the conditions attached to the offer were conditions precedent (preventing a contract from forming until satisfied) or conditions subsequent (allowing a contract to exist but capable of being terminated if not met). The EAT held that this is a matter of construction in each case and that the Tribunal had erred by failing to engage with the claimant’s argument on this point.

On the facts, the EAT concluded that the conditions were conditions subsequent. The offer letter set out all key terms, and the inclusion of a probationary period (which could only operate after employment began) supported the view that a contract had already been formed. The conditions therefore operated as potential grounds for termination, rather than barriers to contract formation.

The EAT also found that, where a contract is silent on notice, a term of reasonable notice will be implied. The Tribunal had erred by relying on the employer’s internal practices and by assessing reasonableness based on matters not known to both parties at the time the contract was made.

In this case, taking into account the seniority of the role, the international relocation, and the overall circumstances, the EAT held that three months’ notice was reasonable. The employer’s failure to provide that notice amounted to a breach of contract. The EAT ordered the employer to pay three months' notice to the claimant.

Learning points for employers

This decision highlights the risks of treating conditional offers as if they can be withdrawn freely. Whether conditions prevent a contract from forming or merely allow it to be terminated will depend on the wording and context, and tribunals will look closely at the substance of the arrangement. Where an offer is accepted and key terms are agreed, a binding contract may exist even if pre-employment checks are outstanding. In those circumstances, withdrawing the offer without notice may give rise to liability. Employers should ensure that offer letters clearly state the effect of any conditions and include an express notice provision, particularly for senior or hard-to-fill roles where a longer notice period may otherwise be implied.

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For more information or advice, please get in touch with Ella Straker in our Employment team.