Ask a lawyer: Can I rescind a job offer following a background check?

HRD talks to an employment lawyer about the legal risks of rescinding an offer of employment subject to background checks

Ask a lawyer: Can I rescind a job offer following a background check?
A recent HRD article highlighted the importance of background checks, but what are the legal risks of withdrawing an offer after receiving a negative reference?

Julia Yeo, legal director at Clyde & Co, said that it all depends on how the offer was written.

If the job offer particularly specified that it is subject to satisfactory references, then HR can withdraw it at any time as it was conditional, she said.

“[However], if the offer is issued unconditionally and the referencing is merely an administrative process, the employer is bound by the offer. Withdrawing it may invite a claim for damages from the candidate who may have resigned or rejected other offers because of this current offer,” she added.

There are also certain scenarios in which an employer would have a harder time justifying withdrawing an offer.

“A job offer can be made on certain fundamental implied terms,” she explained.

For example, if the applicant is applying for a position as a company driver, it is implied that they need a driving licence to get the job, she said. 

“An employer can rightfully rescind an offer if the disqualification is fundamental to the nature of the job offered,” she said.

“The difficulty is when objection is taken on a matter that may not be fundamentally crucial to the nature of the job. Having an undisclosed criminal record would be fatal for a job in a regulated industry, such as banking, insurance or legal. However, it is harder to justify rescinding the offer for that reason if the role is to be a driver.”

While HR directors are generally not held personally liable should a candidate file a claim, Yeo said HR should still be careful in handling job offers.

It is the right of the employer to terminate the HR director’s employment if they are in “clear breach of express instructions not to issue an offer or was wilfully negligent in issuing an unconditional offer,” she cautioned.

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