Offer Withdraw By Company - Is It Legal?

My friend received an offer letter, and he accepted it. Just 10 days before the joining date, the company withdrew the offer letter, stating that they no longer had the requirement. Can my friend take legal action? The company is an MNC, and the location is India.

Well, technically speaking, he can take legal action. The reason is quite simple: as per the Indian Contract Act of 1872, an offer can be revoked until it is received and accepted by the acceptor. Once the acceptance has been accorded by the acceptor, the agreement comes into existence. Any subsequent revocation would amount to a breach of the agreement and thus invite legal consequences.

But apart from the technical view, let's also consider the practical side of it. The candidate selected by the company has never worked with the company at all, so the candidate never transitioned to an 'EMPLOYEE,' as expected after 10 days. In such an event, there is no question of breach. However, there is still some liability on the company.

Even if the employer company takes such an argument, it will be caught in an ethical and legal wrong. We have already discussed the legal wrong in the technical view. Ethically, if the company extended an offer and it was accepted within a reasonable time, the company must honor it.

Now, the big question is: What can we do? Since it's an MNC, it should have a good team of lawyers either on the panel or on payroll to fight for it. If you are in India, unless you have a really good lawyer, your chances of winning are quite low. Otherwise, you have a case to fight provided you provided your acceptance in time.

Hello Valavanur,

Further to what Puneet Sarin suggested/mentioned, please clarify if you have already resigned from your present job. If yes, can you take back the resignation? There are quite a few situations where 'legally' you would be right, but 'practically', the cost-benefit aspects [time, costs & efforts] may not be worth it. I suggest moving on.

All the best,

Regards,
TS

I do agree with Mr. Puneet Sarin's view. There is no point in shadow boxing.

Hi TS and other members,

Considering the above scenario,

Morally, I feel the company is at fault. However, since the candidate never made it to employment, there is no logical reason for a notice period or even for compensation of some kind.

Nevertheless, the candidate obviously resigned from his first job and was ready to move out for the new offer; he can be stuck now! Not every organization (PEOPLE) understands that when an employee resigns, there must be some additional benefits that made him take the step. When we talk about withdrawing one's resignation, that is simply costing the candidate more, leading to losing credibility.

My query:

1. You mentioned that the candidate COULD BE right only on a few occasions! Do ethical bindings/morals have no room in such a trial?

2. When any candidate accepts an offer, is it fair and possible that a compensation-related clause be demanded by the candidate to be included only to protect his/her interest in case such events occur which are not in favor of the company?

3. It is also possible that the employer may ask for a NO-SHOW compensation from the candidate, which seems fair!

Regards

Dear all,

It is illegal and unethical on the part of the MNC to decline an appointment after the acceptance of the offer of appointment made by them. As pointed out by Puneet, compensation is liable in this regard. However, should it be left like that since court procedures are lengthy, cumbersome, and costly? My suggestion is not to just leave it like this. Let there be some harbingers for change.

KK

If at all, the new company does not want to go into a legal battle, they should have allowed a person to join on probation for three to six months. After a month or two, they could have terminated him for non-satisfactory performance. In either case, the employee is in a tough situation. In practice, an individual cannot easily fight in such scenarios, even if they are completely right.

Thank you all for your valuable suggestions. Unfortunately, since the MNC withdrew the offer letter at the very last moment, and his current employer had already recruited another replacement, he had to leave his present job. He is now looking out for opportunities. So he was asking whether taking legal action would help him.

Please let me know if you need any further assistance.

Before proceeding legally, it is better if your friend can have a dialogue with the HR Head of the company that has issued the offer letter and explain the hardship and loss faced due to the withdrawal of the offer letter. Let that dialogue be recorded if possible so that it can be used as evidence at a later date during the legal proceedings. Also, make them understand that he will proceed legally if they do not compensate for the loss faced.

Withdrawing an offer by the company is not ethically right, and he will win the case if the company is unable to settle this issue amicably.

Just an add-up to above.

We are all talking about moral and ethical issues, right and wrong. The question is not about right and wrong here. Let's assume his friend files a case and the case is even admitted by the court. As pointed out in the beginning, the company is an MNC. So presumably, it should have a good legal cell. Even if it doesn't have one, owing to bigger pockets, it can hire good legal personnel, which obviously would presumably be better armed than your friend. Let's even ignore such vast differences and treat both on equal financial footing.

In the Indian scenario, a usual case takes 5-7 years to conclude at the Trial Court, 15 years to conclude at the High Court, and 25 years at the Supreme Court (I'm not talking about exceptions here). This time period is not due to inefficiency but due to an overburdened judiciary. Let's suppose the company doesn't think of going beyond the trial court. In that scenario too, a 5-year period is pretty long. The company can afford to show in its financials as a contingent liability. But can your friend afford to put in that amount of time and effort in attending court hearings (some of which will be merely adjourned) along with his new job? He surely won't be allowed that much leave from the new company. Also, one more critical point here. A pending lawsuit, irrespective of whose favor or against it is, will feature in his profile, and background screening will show red flags, and the new company won't think of going into the hassle of investigating the root cause and genuineness and will immediately reject such profiles.

Exercising a legal remedy is good, but it should be done with a complete cost-benefit analysis. If after 5 years of toil, you receive compensation of say 25k plus legal costs of 5k, will it be worth it for that much of a period?

Mr. Puneet,

No matter what your intentions are, your post suggests that you are advocating on behalf of the MNC here, and the message one can read is simply to Move ON!

To give an analogy: A person (we / us) happens to witness an accident on the road, and the victim (the candidate here) was not at fault, yet he was injured (let's say just mild bruises). If no person stops and confronts or even compels the responsible person for his wrong actions and simply asks the victim to MOVE ON, just imagine where this attitude will lead us (the people).

MOVING ON is not an option! You or anyone for that matter has to fight (no matter what) for what is RIGHT!

I have no allegations against you; I personally feel that we should empower those who know less and give them hope that they can overcome a particular situation (if they are being wronged). It SHOULD NOT matter how powerful your opponent / oppressor is!

Once again, no harsh feelings against you, Mr. Puneet.

Every honest, sincere, and truth loving citizen will definitely supports Getblade comments, and so do I. One must keep on fighting against injustice. There may be people who keep on fighting, knowingly all the hurdles, and we call them mad people. Actually, they deserve great honour and salute, and we too respect their work… since this does not cost us anything !
However, practically, in today’s Indian scenario, especially on judiciary side, it is highly impossible to work on this. The time and cost schedule provided by Puneet is 100 percent truth, and is a fact today. Common man, who wants to live simple and peaceful family life, cannot afford to accept the truth pointed out by Puneet.

To Getblade/Abhaybandekar & to people who thought me as morally incorrect!!

While I had provided both viewpoints, I had stressed ignoring this and preparing for a better future. What I had emphasized is not to accept the wrong. Unless one has the power to absorb such oppression, it's sensible to take a sidewalk. I'm not here batting for MNCs or for corruption, but it's sensible to first understand who we are fighting against. It's like Bhutan fighting a war with the US. It's highly beyond sensibility to fight such a war. But yes, when it's about their dignity and national pride, then all such sensibilities vanish, and righteousness props in.

Let's take another view. Suppose the friend files a case. What will happen then? Will we get our means satisfied? Will we be there physically with that person, or will his filing of the case become a movement aka revolution? As fuel for starting a revolution, it will be really helpful, but at the end of the day, we are all working for 3 things: food, shelter, and self-respect.

Will his friend get this by filing a case? What will happen in all those months when the case will be on? Who will help him financially and for how long? Families expand, time and situations change, and with the current inflation rate, we don't know where it will stop. But even if we all unite, will that suffice for that friend?

If he takes a sidewalk, gets a new offer, starts a new career with a bitter lesson learned in life, won't he be happy?

Ethics, righteousness, etc., are all subjective concepts and should be applied in congruence with realistic situations, at least in today's world.

At the end of this, I express my extreme apologies to all those who have felt hurt by my remarks, which in my opinion were a realistic view. I hope I'm able to put up my thought process here.