Offer and acceptance: at what point do you enter a legally binding contract of employment?

That was the question for the tribunal to determine in Mr J McMillan v Beacon Education MAT Ltd. 

Facts

Mr McMillan, a UK national, had lived in Vietnam for around 8 years. During this time, he taught English, Science and Maths at an Education Centre for two years and for two summers worked at summer schools. Prior to that he worked in Kazakhstan, Dubai, and Abu Dhabi and had a number of gaps between jobs. 

He applied for a maths teacher job at Minehead Middle School in the UK. He emailed the school to explain that verifying his references was going to be problematic. This was because of his intermittent job history and issues with contacting the potential referees in the various countries he had worked in. 

Mr McMillan attended a job interview and was offered the job verbally by the head teacher a few days later. A letter was then sent out to him confirming that the job offer was expressly subject to the following:

• Successful DBS clearance
• Successful medical health clearance
• Two satisfactory references

The school's recruitment policy explained that references must come directly from the referee and would not be accepted if they were addressed ‘to whom it may concern’. Mr McMillan could only submit a ‘to whom it may concern’ letter, dated 2017, from a colleague at the Education Centre in Vietnam.

The UK DBS check was also not completed because Mr Macmillan had only provided two out of the three necessary gateway documents. 

The school withdraw the job offer because Mr McMillan hadn't met the necessary conditions. Mr McMillan didn't accept this. He tried to argue that a legally binding agreement was in place as soon as he accepted the verbal offer of employment. He brought a claim alleging that there had been a breach of contract, and that he had been discriminated by association, arguing that the real reason for the school's conduct was because his wife and children were Vietnamese. 

Employment tribunal decision

Was there a contract of employment?

Unsurprisingly, the tribunal rejected Mr McMillan's principle claim that he already had a legally binding contract in place with the school. The job offer was clearly made with conditions that Mr McMillan had to satisfy first. 

Given there was no contract, the breach of contract claim fell away. 

The tribunal then considered the reason for the withdrawal of the job offer and whether the school's actions amounted to discrimination by association. 

Under section 13(1) of the Equality Act 2010, direct discrimination occurs when an individual is treated less favourably because of a protected characteristic (e.g. race, disability age). Typically, this claim is made by an employee who possesses a protected characteristic. However, it can also be brought by someone who does not have the characteristic but is associated with someone who does. 

In this case, Mr McMillan alleged that the offer of employment had been pulled because of his association with his wife and children who were Vietnamese. 

Why was the job offer withdrawn?

The tribunal noted that Mr McMillan had told the school in his application that his wife was Vietnamese and that he lived in Vietnam with his children. In possession of this information, the school made him a conditional offer of employment. The tribunal held that the offer was withdrawn because of the lack of satisfactory references, not because of his association with his Vietnamese wife and children. 

Therefore, the discrimination by association claim also failed. At an earlier preliminary hearing, a deposit order of £500 had been made because this discrimination claim had little prospect of success. As the claim did go on to fail at the full merits hearing, Mr McMillan had to pay the £500 to satisfy that deposit order. 

Key points for schools and colleges

When making a job offer, particularly in the education sector, it's important that it's made conditional on the applicant satisfying the necessary requirements. That way, if the conditions are not met, there's no contract of employment and you can withdraw the job offer. 

Typical conditions include satisfactory references, DBS checks, and proof of the right to work in the UK. For roles that require specific qualifications, it's also best to make the job offer conditional on receipt of evidence of these qualifications. This is particularly important given recent cases we have explored in our previous articles ‘Can you lawfully dismiss someone if you later find out they’ve omitted important information from their job application' and ‘Can you sack an employee if they’ve lied on their CV (even if it's only a little bit)?' 

Once the conditions are satisfied, then a contract of employment is formed and if you want to terminate it you will need to give notice - even if they haven't started work.  

However, if a job offer is made free of any conditions, once the applicant accepts the offer, a contract of employment exists. If there turns out to be an issue, for example because the employee's references aren't satisfactory, you will need to provide notice to the applicant (or make a payment in lieu of notice).

It's also important to watch out for a situation where your offer is subject to conditions but before they are met, the individual starts work, because this can also give rise to a contract of employment. 

Consequently, its more cost effective and less hassle to ensure that the job offer includes the necessary conditions and these are met before the individual starts work. 

However, it is crucial in every situation to make sure the reason for no longer wanting the individual is free from any form of discrimination. As this case shows, an individual can bring a claim for discrimination as a job applicant; there is no length of service requirement. Ensure you keep clear records of your reasoning in case you are ever challenged. 

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