Is gazumping the new norm in recruitment?

Pam Loch is an award-winning Employment Law Solicitor and Managing Director of Loch Associates Group. Here, Pam considers the current job market, the rise of gazumping in recruitment and what employers can do

‘Gazumping’ is a well-known term in the property market but it is now a growing trend in recruitment too. Candidates will accept one offer but continue their application for other roles hoping to be offered another one with higher pay and/or better working conditions. If they are successful with one of these applications they then will withdraw from the original offer, or even use the second offer to try to negotiate with their original employer for better pay and conditions. Both employers believe they have secured their ideal candidate but are then left disappointed when they withdraw at the last minute. This brings a new layer of complexity to the already costly and time-consuming process of recruitment and for businesses still recovering from the pandemic, it is a worrying trend. The concern is that employers will simply find themselves priced out of the job market and ending up with potentially poorer quality candidates as a second or third choice. So, what steps can prospective employers put in place to protect them from being gazumped?

First of all, are you sure you want to make the offer in the first place? To avoid being the victim of gazumping, it’s important to carry out as much due diligence as you can before making the offer. It may seem obvious but asking the right questions is

important. Did you ask why they are leaving their current role and was it a plausible reason? How did they respond when asked what would they do if they were offered the role and their current employer then said they would increase their current package to keep them?

What can employers do when an offer is accepted but then the candidate says they have changed their mind?

There is a legally binding contract in place as soon as an offer is accepted. Therefore, it is possible to sue for breach of contract, seeking to recover any financial loss arising from the decision to withdraw. In reality, many employers may only suffer minimal financial losses. Taking legal action has a cost attached which may mean that it’s simply not commercially viable to sue them. You could threaten to litigate and they may then change their mind but it’s hardly a healthy footing for a new employment relationship!

If you have suffered more than minor losses and you can quantify the loss, you may want to pursue the candidate for that loss. For example, you may have paid for an expensive training course which you cannot get refunded or delay it for another candidate to take their place. In that scenario you could bring a claim in the Civil Courts if they refuse to pay the costs.

Many candidates are unaware of the potential consequences of withdrawing. Therefore, one option you can consider is including what is in effect a health warning in the offer letter, to try to prevent a candidate who’s not committed to joining you, withdrawing later on thinking there are no consequences.

Another step you could take to stop gazumping, is to make a payment to try to “handcuff” them when they accept the offer. You would have to ensure though that you had a clawback condition in the offer letter to be able to recover it later, if they changed their mind. An alternative less costly option is to ensure you stay in touch with them and invite them to social events. It will help you to build up a relationship before they join but also enables you to pick up on any vibes that they may be changing their views on joining you. With virtual meet ups it’s more challenging to pick up on this, so face-to-face coffees or arranging to meet team members for lunch or drinks after work are usually more effective ways to achieve this. Our HR Consultants know how beneficial this can be as they do this for our clients through the recruitment and retention services we offer.

What happens if the boot is on the other foot though and the employer changes their mind? Unfortunately, you can’t have your cake and eat it. The candidate could sue a prospective employer for losses too if the offer is withdrawn. This can happen when a reference is received which changes your views on the candidate. To cover that off make sure the offer is a conditional one, subject to e.g. references being satisfactory to the business. By doing this you don’t have a binding contract.

Prevention is always better than the cure. So, taking steps to ensure you are recruiting someone who you believe is committed to joining, carrying out the checks to be sure they won’t change their mind and maintaining close contact until they start are the best ways to avoid the painful parting process later.