5. Do employees need to serve notices of termination or make payments in lieu of notice if I back out of accepted job offers prior to their commencement dates?
If a person backs out of an accepted job offer before the commencement date, he or she is not an “employee” at that time and there is no way he or she can give any “notice”. That person will be liable to the employer for damages for breach of contract.
However, if the wording of the employment contract has the following effect, that person must give a notice or payment in lieu of notice to back out prior to the commencement date:
a. The employment contract is drafted in the manner that a reasonable person would have understood that the provision on the notice period or payment in lieu of notice would come into effect immediately upon acceptance of the offer; and
b. the obligation to pay in lieu of the notice is a primary obligation where the provision provides a mechanism for termination of the contract, such that the employer may claim against the employee for the amount as a contractual debt as opposed to a remedy for breach of contract. The term “primary obligation” refers to the contractual provision that expressly provides a mechanism for termination of the contract.
In the following case, the Court of Appeal held that the particular contract in question has the above effect: Law Ting Pong Secondary School v. Chen Wai Wah (CACV517/2019, 11 June 2021).
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