Failure to take up employment clause

With key new recruits, it may be possible to include a failure to take up employment clause, or “no show” clause, in their employment contract.

Breach of contract

Where a job applicant has accepted your offer of employment, and any conditions of that offer have been satisfied, there’s a legally binding contract. If the recruit then decides to withdraw from the contract, they should terminate it by serving their contractual notice period, even if that’s before employment has started. A failure to do so means they’re in breach of contract, for which you could theoretically seek damages in the civil courts. However, such claims are rarely worthwhile.

No show clause

Another option is to include a Failure to Take Up Employment Clause in the recruit’s employment contract, if issued and signed before the start of employment. This clause requires them to pay you an amount of damages in the event that they’re a “no show” and fail to start the role as agreed. However, you should only consider using this type of clause for very senior recruits in highly specialised roles.

Penalty or liquidated damages?

Importantly, this type of clause must not amount to a penalty, as opposed to liquidated damages. Extravagant or unconscionable penalty clauses, which are out of all proportion to your actual financial loss, are unenforceable. Effectively, the sum you seek to recover must be proportionate to your loss. If you want to include our clause in a senior recruit’s employment contract, do ensure: (1) the recruit is legally represented in the employment contract negotiations; and (2) the amount is a genuine pre-estimate of your actual financial loss. Our clause as drafted enables you to recoup any actual losses which you suffer, subject to a maximum of one day’s net basic pay for each day of what would have been the recruit’s notice period had they commenced employment as agreed.