Reading time: 5 minutes

If you have recently employed someone, but now wish to back out, you need to take a variety of considerations into account regarding whether you can terminate the employee.

Some reasons you may want to revoke offers to employ include that you:

  • did a reference check and the employee was not what you expected;
  • found someone else better suited for the role; or
  • changed your mind.

Your options for termination depend on the reason for wanting to terminate the employee. This article will outline the key legal considerations when terminating an employee before they start.

Employment Contract

If your employee has already signed their employment contract, you will need to look into the terms of the contract when determining whether you can terminate them.

For example, some contracts may say the employment is conditional and only commences when the employee shows up for day one at work. 

If this scenario happens and the employee has not commenced work, you may be able to terminate their employment. 

If the employee has started employment, employment contracts often include a probationary period which has a specific notice period attached. You may need to provide the employee with the specified notice period if they have already commenced employment. If there is no probation or mention of notice of termination in the employment contract, you may need to follow the National Employment Standards.

National Employment Standards (NES)

The NES are the minimum employment entitlements in Australia that you must afford to all employees. It outlines that the employee:

  • must have continuous employment; and
  • is entitled to a notice period for termination.

It is not always clear whether an employee may have the right to notice of termination as this depends on whether you have employed them yet.

For example, if the employee has only received an offer and has not commenced working, they are not entitled to notice of termination under NES. 

In contrast, if they had started employment, they would be entitled to the minimum one week notice for termination.

Redundancy and Unfair Dismissal

You do not need to be concerned about redundancy as there is no redundancy pay for employees you have employed for less than 12 months. This is unless their employment contract stipulates differently.

Also, employees cannot lodge an unfair dismissal claim, as this also requires:

  • 12 months of employment for companies with less than 15 employees; and
  • six months of employment for companies with more than 15 employees.

Anti-Discrimination 

It is also important for you to consider the reasons for revoking an offer. You must ensure that anti-discrimination legislation does not prohibit this reason.

For example, if you discovered a prospective employee was pregnant, it would be unlawful to withdraw an offer for this reason alone. 

Similarly, the reason you may wish to withdraw an offer of employment could be due to unsatisfactory pre-employment checks, like criminal history. Here, you may only be able to revoke the offer of employment if the employee’s criminal history relates to inherent requirements of the role.

Misleading and Deceptive Conduct

You may get carried away with making certain statements and promises to candidates about joining your business. Here, you need to be careful to avoid making any false or misleading statements during the recruitment process.

This is especially important when enticing candidates to leave their current employment to take a position in your business. During the recruitment process, you may verbally outline the:

  • nature;
  • conditions; and 
  • opportunities for the job.

If these statements are misleading or deceptive, the employee may be able to bring a claim under competition and consumer laws.

Confronting a Claim for Compensation

Employees can try to bring a claim against your business if you provided an employment contract and revoked it.

For example, the employee may claim that they relied on the signed employment contract and had formed a reasonable expectation of employment with you. This reliance may be to their detriment as they already resigned from their current job.

If you hire an employee and they resign from their original job, and then you withdraw the offer to employ them, there can be some issues. This will depend on why you revoked the offer. 

For example, if the employee failed a background check, this may be ok if there is something in the employment contract about the offer being conditional on background checks. 

On the other hand, if you decided that you wanted to hire someone who was better at the job, then you may be required to provide compensation to the prospective employee.

Tips for Protecting Your Business and Reducing Risk

You should have a robust employment contract drafted to include terms outlining that:

  • the contract does not come into effect until the employee attends one day of work;
  • you have a right to terminate the contract immediately where the employee provides false information about their qualifications;
  • the employment is subject to employee reference checks; and
  • that the written contract contains all of the terms of employment, and the employee agrees that they have not relied on any verbal representations.

Key Takeaways

While it is possible to terminate employees lawfully, it depends on the specific situation and varying factors such as:

  • whether there is an employment contract or enterprise agreement;
  • whether the employee has commenced employment; and
  • the reasons for terminating the employee.

If you are considering terminating an employee before they start, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Rowan O'Neill
Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards