Your Money: Caught between two jobs
You resign from your job to take up a better one - then the offer is withdrawn. What compensation can you claim? By Ian Harper
Wednesday 21 May 1997
The problem was aggravated when it became clear that his old employer had found a suitable replacement, and did not want Harry back. He discovered that he had only a limited claim for compensation against his erstwhile future employer.
It is important to ensure, before resigning from one job, that the offer of new employment is unconditional. If the new job is subject to a satisfactory medical examination, or the provision of good references, the employee should make sure that these conditions can be met before handing in his or her notice to the present employer.
If the offer of employment involves relocating to another part of the country, or even overseas, the employee should check the contract carefully. If the contract specifies only a short notice period and the future employer decides, before the employment commences, to withdraw the offer, the employee will have only limited financial remedies.
The starting-point for calculating damages in these circumstances will be a sum equal to the value of the net salary and fringe benefits (such as the use of a car or pension contributions) that the employee would have been receiving during the notice period provided for in the contract. The employee has a duty to seek to reduce the loss suffered by finding alternative employment.
If the notice period provided for in the offer of employment is short, such as a month, the compensation payment payable will probably be modest.
The damages payment will not take account of the loss of job security suffered by the employee as a result of accepting the offer of employment and resigning from his previous occupation.
Nor will the employee normally be able to recover damages for any relocation costs he or she has incurred as a result of accepting the new job, such as removal expenses and estate agents' and solicitors' fees. In order to recover such costs the employee would need to show that they were incurred at the request of the future employer, in order that the employee could carry out his duties more effectively.
Claims for breach of contract should be pursued in the county or high court - depending on the sums claimed. Such claims must be submitted within six years of the date on which the claim arose.
Compensation payable in such cases will not take account of any statutory protection that employees forgo as a result of having resigned from their previous employment.
Currently, employees who have completed more than two years' continuous employment on dismissal have a potential statutory claim in respect of unfair dismissal. This two-year limit is currently being considered by the House of Lords. These claims are made up of two parts. The first, the basic award, is subject to a maximum of between pounds 105 and pounds 315 in respect of each completed year of employment, subject to a total of 20 years. The second tier, the compensatory award, is subject to a maximum of pounds 11,300.
On dismissal, as opposed to a situation where an offer of employment is simply withdrawn, normally up to the first pounds 30,000 of damages may be paid to an employee free of tax. However, this tax-free concession will not be available in cases where the breach of contract occurs before the employment has commenced. Damages paid for breach of contract are treated as a capital gain and are, subject to the individual's personal allowances, taxed accordingly.
In many cases employees are happy to accept an offer of employment which provides for limited protection if the other is withdrawn prior to the commencement date, because the risk of such an eventuality is remote.
However, those who decide to accept more speculative employment should consider negotiating a longer initial notice period. The rationale is that the longer the employee's notice period, the greater the potential claim if the employee is dismissed without notice.
An alternative is to insist on an agreed payment if the employment is terminated within a set period of time after the offer has been accepted. This may reduce the scope for argument between the parties regarding the amount of damages payable in such circumstances.
Where possible, the employee should seek to negotiate a contribution to relocation costs when a move is necessary as part of accepting the job offer. It is just as important for consideration to be given to seeking a further relocation payment if the employment is terminated within a short period of time, and the employee is forced to move again in search of other employmentn
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
iJobs Money & Business
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...
Day In a Page
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens