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  • Whether an Employer Could Withdraw the Offer?

    Whether an Employer Could Withdraw the Offer?

    Company A sent Lee an offer, in which the company had stated the position, salary, the date of employment and so on. Lee replied to accept the offer, and applied for resignation to the current employer. Unexpectedly, a few days later, Company A informed Lee that the offer was withdrawn. Both parties have disputes on the withdrawal.

    Then whether an employer could withdraw the offer?

    First, the relationship between the two parties is the key for determining the applicable laws. Article 7 of the “Labor Contract Law” stipulates that the employer shall establish an employment relationship with the employee from the date of employment…… . Article 10 stipulates that a written labor contract shall be concluded in the establishment of an employment relationship……. where an employer and an employee conclude a labor contract prior to the employment, the employment relationship is established from the employment date. In view of the above, before the employment date, which refers to the date that an employee begins to work, the employment relationship has not been established, so the laws and regulations related to labor could not be applied. Therefore, the dispute in the opening shall not be deemed as a labor dispute, instead it shall be deemed as a contract dispute.

    According to Article 13 of the “Contract Law”, an employment offer is an offer, and the employee’s reply is a promise. However, according to Article 17 of the “Labor Contract Law”, a labor contract shall be made in written, but both parties have neither signed a labor contract, nor begined the work, so the employment relationship has not been established yet. Generally speaking, although both parties have not established a contract relationship, Company A’s behavior is insincere, and it shall undertake the liabilities, such as it shall compensate Lee’s loss, in accordance with Article 42 of the “Contract Law”. In judicial practice, normally, the relevant loss would be calculated based on the employee’s original wages, and unemployment time, which includes the unemployment time during the litigation proceedings.

    If Company A withdraws the offer before Lee has received it, whether Company A still has to undertake the relevant liabilities? According to Article 17 of the “Contact Law”, normally, the answer is “No”. For example, Company A sends the offer by express which will be delivered to Lee the day after tomorrow, but Company A sends the withdrawal notice by express which will be delivered to Lee tomorrow. If Lee receives the withdrawal notice earlier than or at the same time with the offer, Company A does not have to undertake the relevant liabilities. The only exception is that if Company A has stated the time limit for the response in the offer, or used other methods to expressly indicate that the offer is not irrevocable, then such offer could not be withdrawn.

    In practice, the letter of intent (“LOI”) could be taken into consideration. An LOI would be deemed as an invitation for offer (“IFO”). According to Article 15 of the “Contract Law”, an IFO is an expression of intent to invite other parties to make offers thereto. The difference between an IFO and an offer is that the contents in an offer shall be specific and definite, the offeror will be bound by the expression of intent in case of acceptance by the offeree; but an IFO is only the way to express the intent for an offer, it is still uncertain that whether both parties will establish a contract relationship. For example, “Our company is satisfied with your performance in the interview, and we would like to invite you to discuss the details of the employment on [time], [day], [month], [year]”, this is a typical IFO. If a company lists the wages in the notice, and also states some liability immunity clauses, such as “this notice is an invitation for offer, which shall not be deemed as an offer, our company will not be liable for your loss for resignation.” , whether such notice shall be deemed as an IFO or an offer? There are disputes on such circumstance, but even if such notice would be deemed as an offer, such clauses could be used to defend for the loss for resignation claimed by an employee.