What happens when an employer offers someone a job and then decides to withdraw the offer before the employee starts work? This situation raises important legal and contractual considerations. Here's what employers and prospective employees need to know.

 

Changing minds after making an offer

It’s not uncommon for employers to reconsider a hiring decision after making a job offer. For example, an employer may offer a role with a start date two weeks away, only to later receive concerning information during reference checks. If the employer then decides to withdraw the offer, what are the legal implications?

Suppose the candidate has already resigned from their current job and now faces financial hardship. Can they seek compensation even though they haven’t started the new role?

 

Employment contracts begin at acceptance

Under Australian employment law, a contract of employment is formed once the offer is accepted—not when the employee starts work. This means that even if the employee hasn’t commenced duties, they may still be entitled to certain protections.

If the offer was for permanent employment and the employer withdraws it before the agreed-upon start date, the employee is generally entitled to receive minimum notice under Section 117 of the Fair Work Act 2009. This typically means:

  • One week’s notice, or

  • One week’s pay in lieu of notice

This applies unless a longer notice period is specified in the contract.

 

Adverse action and discrimination risks

Employers must also be cautious about the reasons for withdrawing a job offer. Under the general protections provisions of the Fair Work Act, it is unlawful to take adverse action against a prospective employee on the grounds of discrimination.

For example, if an employer rescinds an offer upon learning that the candidate is pregnant, this could constitute unlawful discrimination. In such cases, the prospective employee may lodge a claim under the general protections provisions, which prohibit adverse action based on:

  • Pregnancy

  • Race, age, sex, or other protected attributes

  • Temporary absence due to illness or injury

  • Exercise of workplace rights

 

Key takeaways for employers

A job offer becomes a binding contract once accepted, even if the employee hasn’t started work. Withdrawing an offer may trigger obligations under the Fair Work Act, including providing notice or making a payment in lieu.

Employers must avoid rescinding job offers for discriminatory reasons, as they risk facing legal action under general protections.

Clear documentation and lawful reasoning are essential when withdrawing an offer.