When Does an Employment Relationship Legally Start in New Zealand?
The line between recruitment discussions and a binding employment relationship can be thinner than many employers realise. Recent Case Law shows that even casual email exchanges may create legal obligations, sometimes giving applicants the same rights as employees, even before day one on the job. This article explains what legally constitutes an employment offer, what “a person intending to work” means, and what employers must consider before withdrawing an offer.
When does an employment relationship commence?
This is a question that can often arise when parties are in discussions, or negotiations, as part of the recruitment process – specifically when those discussions subsequently do not then end in the employee securing the role. Case Law has reinforced that a candidate “intending to work” for the employer, may have the same legal rights as an existing employee, even if an offer of employment is subsequently withdrawn.
What constitutes an employment offer?
In most cases, the offer is evidenced by the provision of an individual employment agreement, with this having been signed and returned. However, as many negotiations occur electronically, email or text correspondence can create an ‘offer and acceptance’ situation if such correspondence contains the core details of the offer, and the candidate provides some form of implied acceptance. Verbal offers may have the same legal status, although it could be arguable as to what was offered, and what constituted the acceptance.
Who is “a person intending to work”?
Based on relevant Case Law, a ‘person intending to work’ is someone who can demonstrate that a genuine offer of employment has been made to them (outlining the core offer provisions such as role title, commencement date, and remuneration rate) and the candidate has provided some indication of acceptance of these provisions. If these facts exist, the candidate may have the right to pursue a personal grievance claim for unjustified dismissal or unjustified disadvantage with respect to the subsequent withdrawal of an offer of employment.
However, not all ‘negotiation’ emails may constitute an official offer, and not all positive responses may be considered ‘acceptance’.
What does recent Case Law say about email acceptance of an ‘offer’?
Within Hiemer v Style Club NZ Ltd, Ms Heimer had applied for the role of an Emerging Hair Stylist and was initially offered the role, with this offer later being withdrawn. Ms Hiemer challenged this withdrawal claiming that, as she had accepted the offer, she was now a ‘person intending to work’ and that the withdrawal therefore amounted to an unjustified dismissal.
The Authority, in determining the matter, reviewed all email correspondence and the employment agreement provided (which had not been signed by either party) with them specifically reviewing Ms Hiemer’s responses to the emails where she stated: “I am happy with that”, that she was “happy and appreciative” and “That’s fine in terms of the contract, I’ll get it printed out and signed”.
In reaching his conclusions the Authority stated that:
“it was not determinative on its own that the email required a specific mode of acceptance. A “meeting of the minds” was still possible short of the paperwork being completed, if those communications were sufficiently clear to indicate that Ms Hiemer accepted the offer in its entirety. However, the Authority found that the words “that’s fine” were open to being interpreted as referring to the discussion on commission and therefore were not clear enough to indicate she accepted the offer in its entirety”.
Ultimately, the Authority determined that:
“a binding agreement to form an employment relationship was not created, because the communications from Ms Hiemer were not explicit enough to amount to an acceptance of the offer. Therefore, Style Club had been entitled to withdraw the offer prior to any acceptance. The Authority concluded that Ms Hiemer was not an employee and therefore could not pursue a personal grievance”.
You can read this full case by clicking on this link:
Can Russell Drake Consulting assist us if we get into a position where we wish to withdraw an offer of employment?
Yes, we strongly recommend that, if you have been in discussions with an applicant and now wish to withdraw that offer – even if an employment agreement has already been signed, you should seek advice as to your rights and the correct processes required to legally withdraw the offer.
Please feel free to contact us directly if you have any questions with respect to the ‘offer and acceptance’ process.