THE Covid-19 pandemic has brought on one of the worst job crises now commonly referred to as The Great Resignation, which has caused an oversupply of jobs and fewer applicants for jobs on offer.
Businesses have introduced cost-cutting measures and alternative work arrangements in an attempt to keep themselves afloat. Despite this, businesses must proceed as usual. This means offers of employment continue to be extended to prospective candidates, to fill gaps in the workforce, while businesses balance volatile market conditions, and changes in commercial/business decisions, with the pandemic, war and other major global events still looming over us.
Employers may need to make difficult choices in their attempts to sustain their businesses, such as cost reduction that may involve trimming existing or incoming workforce requirements. What then happens to employment offers that have been issued, and can potential employers legally withdraw or rescind offers made prior to the commencement of employment?
Typically, employers will provide candidates with a letter of offer containing general terms of employment and this will be supplemented with an employment contract, usually upon commence-ment of employment.
In other cases, the letter of offer will be the only formal document between the parties and will document the full terms of employment which will include employment conditions prior to the commencement of employment (for example, passing reference checks or medical checks); employment benefits; notice periods; and even a clause to allow the employer to withdraw the employment offer in certain prescribed circumstances or beyond stipulated timelines. Prior to both parties agreeing on the terms, either party is allowed to walk away from the offer that is on the table.
If, however, the employment offer has been accepted and a binding contract has been formed between the parties, what are the recourses available?
In Malaysia, in addition to the civil courts, there is an Industrial Court that specifically hears matters pertaining to workmen, employers and trade unions, and has the power to order reinstatement, grant back wages, and compensation in lieu of reinstatement.
In the recent Industrial Court decision of Mohammad Ulfa Usamah v Allegis Group Malaysia Sdn Bhd, the claimant brought a claim for unfair dismissal against his prospective employer for withdrawing the offer prior to the commencement of his employment.
The Industrial Court dismissed his claim for unfair dismissal as it is an established principle that a prospective candidate will not be considered an employee prior to the actual commencement of his employment. As such, prospective candidates will not be able to file a claim for unfair dismissal arising from the withdrawal of an employment offer, as they are not considered as “workmen” under the Industrial Relations Act 1967.
However, the prospective candidate may file proceedings in the civil courts against the employer on grounds of breach of contract, subject to proving he has suffered damages. It should be noted that taking the above into account, employers are not bound by the employment offer, and will not be compelled to reinstate the withdrawn employment offer although they may be liable for damages for breach of contract.
In a nutshell, it is imperative that the letter of offer or employment contract documents the full terms of employment that will govern the relationship between the prospective candidate and the employer.
Ultimately, the outcome of each case would be dependent on its factual matrix and legal advice should be sought before any decisions regarding the offer or termination of employment are made.
This article is contributed by Ho Lye Tong of Christopher & Lee.
