Get pre-employment checks done before the worker starts
Employers and workers commonly enter into employment agreements that will take effect when the employee commences work at some later date. Once the agreement is made, that person is intending to work and has enforceable rights.
Particularly in certain occupations, offers of employment are often made on the basis that satisfactory pre-employment checks, such as police checks, are received. A recent Employment Court decision highlights the importance of completing those pre-employment checks before employment starts.
Towards the end of 2020, Edwards was looking for new employment. He had several meetings with Justin Soong, who was the Laybuy chief technology officer. Edwards was verbally offered employment with Laybuy by Soong, who also advised him that there would be some checks to go through.
Edwards was then sent documents including a letter confirming the conditional offer of employment, a copy of an individual employment agreement already signed by Soong, and a consent form for pre-employment checking (which included consent to a police criminal check).
In the letter, Laybuy advised that should it not be satisfied with the results of the checks, the offer could be withdrawn. The individual employment agreement did not contain any conditions regarding pre-employment checks.
Edwards then had a conversation with the HR manager and told her of various matters that were likely to show up on his police criminal check. He said he had not advised the company of these matters sooner as he was not explicitly asked. The HR manager advised Edwards that when the checks were received, the results from the police criminal check would be escalated within Laybuy for consideration.
The police criminal check came back. That check confirmed the matters Edwards had mentioned to the HR manager. The next day, the HR manager called Edwards and advised him that the offer of employment was withdrawn because of the outcome of the police criminal check.
A letter confirming the withdrawal of the offer was sent to Edwards on January 12, 2021. Edwards then emailed Laybuy advising that, as his contract required him to start at work the following Monday, he wanted to make it clear that he was not abandoning his employment and was awaiting further instruction on what to do on the Monday morning.
Laybuy replied, saying there was no employment relationship entered into between Edwards and Laybuy and no requirement for him to attend the Laybuy office as the offer of employment had been withdrawn.
The Employment Relations Act includes an extended definition of “employee” to include “a person intending to work”. A person intending to work “means a person who has been offered, and accepted, work as an employee”. The act does not define the words “offered” or “accepted”.
The authority determined that as the offer of employment was conditional, and as the conditions attached to the offer were not fulfilled or waived by Laybuy, there was never a completed offer and acceptance. That meant that Edwards was not a person intending to work and was not covered by the act and could not bring a personal grievance claiming that he was unjustifiably dismissed.
On appeal to the Employment Court, Judge Joanna Holden took a different approach. She said the act departs from a strictly contractual approach to employment, and its emphasis is on the relationship between the parties. Where parties have not yet begun to act on that relationship, the only thing tying them together is any understanding or agreement between them.
If one or both of the parties do not intend to be bound by that understanding or agreement, it seems implausible to describe the situation as an “employment relationship”, giving rise to the rights included in the act, including the right to bring a personal grievance.
The judge concluded that the letter from Laybuy advised Edwards he would only be employed if it was satisfied with the results of the pre-employment checks. If it was not satisfied, then if Edwards had not started work, the offer would not proceed – it would be withdrawn. Laybuy’s withdrawal of the offer made it clear that it did not intend to be bound to employ Edwards even though he had accepted the employment agreement.
Unfortunately, some pre-employment checks (such as police checks) can take some time to come through. It is not uncommon for the person to start work before the business receives the check. This judgment makes it clear that if Edwards had started work, the employment relationship would have been established and he would be entitled to bring a personal grievance claim – a much harder scenario for Laybuy to extricate itself from.