Terminations of Offers of Employment

When hiring a new employee, it is essential for every employer to consider that our labor law stipulates that if the employer terminates the contract before the scheduled start date of the employment relationship, they must compensate the worker for the damages caused, which cannot be less than one month’s salary, except in contracts agreed upon for a period of less than one month.

This provision is well understood when written employment contracts are signed with a future start date. However, it is not always considered when job offers are made verbally or in writing through letters or emails, even though the same regulations apply in these cases if such offers may be considered employment contracts due to the existence of an offer and acceptance.

Our labor legislation defines an employment contract as a verbal or written agreement in which a person agrees to provide services under the subordination or dependency of another. This means that a written contract is not necessary to create the obligation to compensate a future employee if, after extending a job offer, the employer decides not to proceed with the hire before the first day of work.

It is important to note that various factors must be considered in each case. Nonetheless, employers should be aware of the risks involved in such situations, risks that can be mitigated by taking appropriate precautions, especially given that there is no maximum limit on the compensation amount that may be determined by a competent authority.