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You resign from your job to take up a better one - then the offer is withdrawn.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

Harry is still recovering from every employee's nightmare. Having happily worked for one company for some years he was offered an attractive job elsewhere. However, before he was due to start work his future employer decided that it did not need him after all.

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

PROMOTED VIDEO
Life and Style
A still from a scene cut from The Interview showing North Korean leader Kim Jong-un's death.
tech
Voices
'That's the legal bit done. Now on to the ceremony!'
voicesThe fight for marriage equality isn't over yet, says Siobhan Fenton
Life and Style
Approaching sale shopping in a smart way means that you’ll get the most out of your money
life + styleSales shopping tips and tricks from the experts
Arts and Entertainment
Bianca Miller and Katie Bulmer-Cooke are scrutinised by Lord Sugar's aide Nick Hewer on The Apprentice final
tvBut Bianca Miller has taken on board his comments over pricing
News
in picturesWounded and mangy husky puppy rescued from dump
News
newsAstonishing moment a kangaroo takes down a drone
Life and Style
Duchess of Cambridge standswith officials outside of the former wartime spy centre in Bletchley Park
tech
News
people
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    SThree: Graduate Recruitment Consultant

    £20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...

    Day In a Page

    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all
    The week Hollywood got scared and had to grow up a bit

    The week Hollywood got scared and had to grow up a bit

    Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

    Panto dames: before and after

    From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
    Thirties murder mystery novel is surprise runaway Christmas hit

    Thirties murder mystery novel is surprise runaway Christmas hit

    Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
    Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

    Anne-Marie Huby: 'Charities deserve the best'

    Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
    The botanist who hunts for giant trees at Kew Gardens

    The man who hunts giants

    A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
    The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

    The 12 ways of Christmas

    We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
    Birdwatching men have a lot in common with their feathered friends, new study shows

    The male exhibits strange behaviour

    A new study shows that birdwatching men have a lot in common with their feathered friends...
    Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

    Famous diaries: Christmas week in history

    Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
    From noble to narky, the fall of the open letter

    From noble to narky, the fall of the open letter

    The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
    A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

    A Christmas ghost story by Alison Moore

    The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'