Employers in the DIFC are normally aware of the need for clearly-drafted contracts governing the terms and conditions of an individual's employment. However, many employers pay less attention to the offer letters which are issued to prospective employees prior to the signing of a contract of employment. However, the DIFC case of Gaspar v Gavrilla & Company [SCT April 3, 2016] illustrates the importance of the terms of offer letters. In this article we highlight some of the key considerations when drafting offer letters and flag the potential pitfalls of getting them wrong.
Gaspar v Gavrilla & Company
In Gaspar v Gavrilla & Company, an offer of employment was made by Gavrilla & Company to Mr Gaspar subject to Mr Gaspar providing the company with satisfactory references, one of which was required as being from Mr Gaspar's "last employer". Mr Gaspar provided references but the company subsequently discovered that he had not disclosed his actual last position of employment to the company nor had any reference been provided by his actual last employer. The company withdrew its job offer to Mr Gaspar who responded by claiming significant damages in the DIFC courts on the grounds that the company had acted in breach of contract.
However, His Excellency Justice Shamlan Sawalehi held that Mr Gaspar's failure to comply with the conditions set out in the offer letter issued to him by the company meant that there was no valid and binding employment contract between Mr Gaspar and the company. It therefore follows that the company could not have acted in breach of contract by withdrawing its job offer to Mr Gaspar.
Pre-conditions of employment
The case of Gaspar v Gavrilla & Company highlights the importance of including clear and well-drafted pre-conditions of employment in offer letters. In particular, DIFC employers should consider making offers of employment subject to:
- the prospective employee obtaining all the necessary approvals (including any applicable regulatory approvals) permitting them to work lawfully for the employer in the DIFC;
- the provision of employment references which are satisfactory to the employer;
- the prospective employee providing evidence of relevant academic or professional qualifications or memberships which is satisfactory to the employer;
- the prospective employee passing a medical examination;
- the employer receiving results from any financial probity/credit checks in relation to the prospective employee which it considers to be satisfactory;
- the employer receiving results from any criminal background checks (whether in the UAE or elsewhere) in relation to the prospective employer which it considers to be satisfactory; and/or
- the prospective employee signing an employment contract in a form acceptable to the employer.
DIFC employers should also consider the following issues when issuing offers of employment:
- References: identify those sources from which it wishes to receive a reference about the prospective employee and wait until the prospective employee accepts the offer of employment before approaching any potential referee. There is no obligation on DIFC employers to give a reference although any reference which is given should be accurate.
- Resignation: consider reminding the prospective employee not to resign from their current position until they have satisfied any pre-conditions of employment.
- Legal restrictions: obtain the prospective employee's confirmation that they will not be in breach of any express or implied legal obligation by accepting the offer of employment and/or commencing employment with the employer.
- Entire agreement: make clear that the terms of the offer letter override any previous statements made to the prospective employee to avoid claims that those statements form part of the terms of employment.
- Withdrawal: reserve the right to withdraw the job offer if (i) the prospective employee has not accepted it by a particular date; (ii) the prospective employee has not commenced employment by a particular date; or (iii) it comes to light that the prospective employer has failed to satisfy any pre-conditions of employment and/or has provided false or misleading information during the recruitment process.
Breach of contract
If an offer letter does not contain clear and well-drafted pre-conditions of employment, there is a risk that the offer, if accepted, could amount to a valid and binding employment contract and any attempt by a company to withdraw the offer could give rise to a claim for breach of contract. Damages for breach of contract would be assessed by reference to the loss suffered by the prospective employee as a result of the company's breach (subject to the prospective employee's duty to mitigate their losses).
If the employee has resigned from their previous role to accept the offer of new employment, their losses could be significant (e.g. they could include salary, bonuses, relocation costs etc).
DIFC Employment Law No.4 of 2005, as amended (the DIFC Employment Law), prohibits an employer from discriminating against an individual (unless there is a bona fide occupational requirement) with regard to employment, or any term or condition of employment, on the grounds of sex, marital status, race, nationality, religion and/or mental or physical disability (meaning a mental or physical impairment which has a substantial and long term adverse effect on his ability to carry out his duties in accordance with his employment contract).
If a prospective employee successfully argues that a company's offer of employment amounts to a valid and binding employment contract, any attempt to withdraw the offer could give rise to a claim under the anti-discrimination provisions in the DIFC Employment Law.
There has not yet been a successful claim for discrimination in the DIFC Court of First Instance. However, a DIFC court would likely follow UK common law principles and award a successful claimant compensation based on loss of earnings arising from the discriminatory act and possibly a sum for injury to feelings.
Withdrawing a job offer could also give rise to a claim for misrepresentation by the prospective employee on the basis that the company made an incorrect statement or opinion to induce the prospective employee to enter into a contract of employment. Damages for misrepresentation would be assessed by reference to the loss suffered by the prospective employee as a result of entering into the contract of employment.
In light of the comments made by the DIFC Small Claims Tribunal in Gaspar v Gavrilla & Company and the risks highlighted above, it is important that DIFC employers review their employment offer documentation (including offer letters and contracts of employment) to ensure that they are adequately protected in the event that they wish to withdraw an offer of employment made to a prospective employee.