Are Rescinded Job Offers On The Rise?
Here’s everything you need to know to mitigate risks and land on your feet as quickly as possible.
In April, Randall (not his real name) was approached by a recruiter with a senior-level role in the crypto sector. That was before the Terra Luna crash when the market was bullish, and this job offer came with a substantial pay increment. Randall took a leap of faith, resigned from his job, and got his employment permit cancelled to accept this offer. Then, in June, ten days before he was due to start in the new role, he received an email. The job offer had been rescinded.
Another jobseeker, Alex (not his real name) also resigned from his job to accept a business analyst role, only to have the offer rescinded in June.
Though such cases used to be rare, in recent months, rescindments have rippled across tech and other sectors, especially within the start-up ecosystem.
The bearish turn of the market played a large role in shaping hiring trends. “At the beginning of the year, it was very easy for start-ups to raise cash. But the sentiment in the market and fundraising environment quickly turned upside down in recent months, even though employment contracts have already been signed,”
- Heinrich Wendel, co-founder of e-commerce aggregator platform iPrice Malaysia
“Talent recruitment consumes substantial company resources. So it is uncommon for employers to rescind job offers unless there are compelling reasons such as sudden business decisions, the revelation of candidates’ gross misconduct, or failure of background checks. However, in anticipation of economic headwinds, there has been more news of job rescindment and retrenchments recently as companies begin optimisation efforts,” shared Bay Wee-lim, Head of Human Resources at Browzwear, a provider of 3D fashion design, development, and merchandising solutions.
“Industries that have yet to rebound from COVID-19, or that have undergone aggressive hiring in the past six to twelve months may be bearing the brunt, and find themselves having to undertake such optimisation measures for their workforce,” she added.
The bearish turn of the market played a large role in shaping hiring trends. “At the beginning of the year, it was very easy for start-ups to raise cash. But the sentiment in the market and fundraising environment quickly turned upside down in recent months, even though employment contracts have already been signed,” shared Heinrich Wendel, co-founder of iPrice Malaysia which helps online shoppers in SEA save money, who regrettably had to let go of 20% of its staff.
“Start-up founders need to put the interest of the company and employees first, so we may sometimes end up in a difficult situation where we need to let go of some staff in order to keep costs in check, get through these difficult times, and make sure we don’t hit the wall. And when it comes to letting go of staff, it is often last-in-first-out as stipulated by law,” he explained.
Still, many talents find themselves blindsided, and their career trajectory derailed. “Because the company broke a contractual agreement, it forced me to re-start my job search efforts at a disadvantageous time in the economy, where job opportunities and salaries were substantially poorer,” said Randall.
Sometimes, these rescindments may happen before job seekers officially accept the offer. Sometimes, it may take place after the contract has been signed. Regardless, such contracts provide little protection against rescindments in many countries such as Singapore and Malaysia.
“In the context of Singapore, there is unfortunately little recourse since it is usually not illegal for employers to withdraw their offers. Likewise, a candidate can also withdraw after accepting a job offer without having to compensate the hiring company,” noted Bay.
Nonetheless, talents such as Randall argue that companies have an ethical obligation towards their hires. “Businesses will always move on, but people’s livelihoods and careers are at stake,” he said.
“Hiring freeze may remain for a while, but dramatic retrenchment and job rescindment may taper off when businesses reach equilibrium between their balance sheets and the predictability of the economy,”
- Bay Wee-lim, Head of Human Resources at Browzwear
Some companies such as iPrice Malaysia do indeed try their best to help affected candidates by offering additional compensation. To do so, the company considered new hires like they were in their probation period. They then put them on immediate garden leave, compensating them for a longer time than as stipulated in the employment contract probation terms to provide them with more financial buffer and time to secure other offers.
iPrice’s management team also activated its network to help retrenched hires secure new jobs. “We reached out to friends, and other start-ups and companies to let them know that we had to go through this exercise and none of it was performance related. We told them that these are really good people, shared their CVs, offered references, and did diligent follow-ups to ensure that they got a new offer as fast as possible,” shared Wendel.
In addition to such goodwill gestures by such companies, talent may also be gladdened to know that rescindments may not continue for much longer. “Hiring freeze may remain for a while, but dramatic retrenchment and job rescindment may taper off when businesses reach equilibrium between their balance sheets and the predictability of the economy,” said Bay.
In the meantime, for talent looking to move to new careers in this hiring climate, here are nine tips from HR experts, founders, and job seekers on how to ride out this rescindment surge.
HOW TO REDUCE THE RISK OF RESCINDMENTS
“No matter what start-up you are joining, you should always ask about their cash flow, growth trajectory and plans for the next growth period so you can consider if a particular start-up is solid enough for you or if you are better suited for either a more mature start-up or a corporation,”
- Heinrich Wendel, co-founder of e-commerce aggregator platform iPrice Malaysia
#1 Assess your risk profile: “Ultimately, when you make the decision to join a start-up, you know you will be exposed to more uncertainty and volatility, especially in the current environment where funding is not readily available. So it’s good to be aware of that,” said Wendel.
#2 Ask the right questions: “No matter what start-up you are joining, you should always ask about their cash flow, growth trajectory, and plans for the next growth period so you can consider if a particular start-up is solid enough for you or if you are better suited for either a more mature start-up or a corporation,” stressed Wendel.
“Fundraising rounds are publicly announced nowadays, so if you are not convinced by the answers you get, you can also look into the fundraising history of the company and do a bit of math to see how solid their cash flow is for the near future. Based on that, you can ask more direct questions and judge for yourself,” he suggested.
#3 Research the company and role: It is also a good idea to find out the company’s reputation when it comes to hiring and human resources. “Some red flags to look out for include the continual shifting of start dates or having multiple changes in the reporting manager,” noted Rachel (not her real name), co-founder of a Series A, B2B solutions company.
“Consider the importance of the role in the organisation. If the role is very important, the offer is very unlikely to be rescinded. The good-to-have roles face a lot more risk. It is also good to find out whether the job you are considering is a new role or a replacement role – replacement roles generally tend to be safer,” she added.
#4 Don’t be too quick to resign or reject other offers: “Read into the fine print of the job offer and what it is contingent on, such as reference or background checks. Ensure that all these checks are completed and the employment contract is signed before resigning with your current employer or turning down other offers,” advised Bay.
Having experienced a rescindment, Randall also encourages others to keep their options open until work has started. “Don’t turn down extended offers or stop ongoing recruiting processes until you have begun work, because anything can happen, even after a contract is signed. We’ve entered a new stage of the job market and candidates must watch out for themselves first and foremost,” he said.
#5 Protect yourself from rescindments: “Though this is rare, some candidates may negotiate for compensation from employers at the job offer stage should their job offers be rescinded,” said Bay.
HOW TO DEAL WITH RESCINDMENTS
A lot of factors may have come into play and it is not your fault that the offer is rescinded. Just focus on what you can do to prepare for other interviews,” said Alex (not his real name), who has since found a new job.
#6 Try not to take it personally: “While I was disappointed and slightly angry at first, the situation was understandable given the conditions of the market back then, and how it will be for the next 12 to 18 months. So I would say the most important thing is not to take it personally. A lot of factors may have come into play and it is not your fault that the offer is rescinded. Just focus on what you can do to prepare for other interviews,” said Alex, who has since found a new job.
#7 Enquire about compensation: “If you are rescinded because of the lack of business needs, and your employment contract includes a clause for compensation, ask about it,” suggested Rachel.
#8 Initiate deep networking: “After my job offer was rescinded, I immediately reached out to my direct and indirect connections to explore opportunities and have conversations. I evaluated various industries, roles, and locations to determine what the state of the market was for my skill set and based on that decided what sector to focus my efforts on,” shared Randall, who has also recently accepted a new job.
#9 Be professional and gracious: “Find out why the job is rescinded for closure but avoid aggression and threats. That will not help the situation and you may inherit a negative reputation with the company and even within the industry,” said Bay.
“Keep in touch in a positive manner and don’t burn bridges. If the candidate really likes the company and the time is not right, just keeping in touch might make you the first person they will call when the role opens. You can also ask when is a good time to reconnect on this role again. Getting a gauge on that would be quite helpful,” added Rachel.