Getting an offer letter and joining a company is often seen as the beginning of a promising career journey. However, it can be devastating if the company cancels the offer letter even after the employee has joined. In India, such a situation raises complex legal, contractual, and employment law issues.
This article explains what you can legally do if a company cancels your offer post-joining, with references to relevant laws and landmark court judgments.
Is an Offer Letter Legally Binding After You Join?
Absolutely. Once you accept an offer letter and start working, under Indian law, it becomes a binding contract of employment. If the company then cancels it without proper reason, it’s more than just unfair, it’s potentially illegal.
Key laws protecting you:
- Indian Contract Act 1872
- Industrial Disputes Act 1947
- State-specific Shops and Establishments Acts
If you’ve started working, you have real rights, not just promises on paper.
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Your Legal Arsenal: 5 Strong Remedies You Can Use
1. Sue for Breach of Contract: They Promised, You Delivered
If you’ve joined and worked even a single day, you’ve fulfilled your end of the deal. Under the Indian Contract Act, if they break that deal, you can claim damages.
Example from Court: In Sanjay Jha v. Jet Airways (India) Ltd., the court ordered the company to pay compensation after unfairly ending employment.
2. Fight Back Against Wrongful Termination: Demand What’s Fair
If the company didn’t follow due process or provide a valid reason, you can claim:
- Compensation for sudden job loss
- Reinstatement, if appropriate
- Salary for the notice period skipped
Courts have repeatedly held that firing someone without warning or investigation violates principles of natural justice.
3. Raise an Industrial Dispute (If You Qualify as a Workman)
If you’re in a technical, clerical, or supervisory role, you may be protected under the Industrial Disputes Act.
Companies cannot revoke offers for “workmen” without following strict procedures, including notice and compensation.
Real Case: In Hindustan Tin Works Pvt. Ltd. v. Employees, the Supreme Court ruled in favor of workers who were terminated without following the proper retrenchment procedure.
4. Use Promissory Estoppel: If You Relocated or Resigned for This Job
If you left another stable job, moved cities, or made life changes because you trusted this offer, you can argue that you relied on the company’s promise and suffered harm.
In Bangalore Development Authority v. Syndicate Bank, the Supreme Court ruled that when one party suffers after relying on another’s promise, the law steps in to protect them.
5. Complain Under the Shops and Establishments Act
Many states require companies to follow termination rules even during probation.
Filing a complaint with the labor commissioner can pressure the employer to compensate or rectify their actions.
Example: The Maharashtra Shops and Establishments Act mandates notice and fair procedure even for probationary employees.
Real-World Steps You Should Take Immediately
If you’re going through this, here’s what you should do based on real first-hand advice:
1. Ask for a Written Reason First
Request HR to provide the cancellation reason in writing.
This written proof will be critical if you later pursue legal action.
2. Try Negotiating First
Before jumping into a court battle, attempt negotiation. Many companies prefer settling by offering
- Notice pay
- Relocation cost reimbursement
- Additional compensation to avoid bad publicity
Personal Tip: Negotiating smartly with knowledge of your rights often leads to better outcomes.
3. Send a Strong Legal Notice
If negotiation fails, instruct a lawyer to send a formal legal notice demanding
- Damages for breach of contract
- Reimbursement for relocation and financial loss
- Compensation for emotional distress (where applicable)
A sharply worded legal notice often triggers a quick settlement.
4. File a Civil Suit for Damages
If informal approaches fail, file a civil suit under the Indian Contract Act, claiming damages for breach of contract.
5. File a Labour Complaint
If your designation meets the definition of a workman, you can file a complaint before the Labour Commissioner or an Industrial Tribunal.
They have the authority to order reinstatement, back wages, or compensation.
Watch Out: What the Company Might Say to Defend Itself
Employers may defend their actions by claiming:
- Termination was allowed under the probation clause
- Unsatisfactory performance during the initial period
- Material misstatements made by the employee
Even if such clauses exist, companies must act reasonably and cannot act arbitrarily. Courts anticipate that employers will give good cause and adhere to just procedures.
Tip: Review your offer letter and appointment documents carefully. Understanding it properly helps anticipate the company’s defense.
Your Survival Kit: Key Documents to Keep Safe
Preserve the following documents to strengthen your case:
- Offer letter
- Appointment letter
- Relieving letter from your previous job
- Resignation letter submitted earlier
- Relocation expense receipts
- All emails or written communication with the company
- Pay slips (if any salary was credited)
First-hand Tip: Screenshots of emails, chats with HR, or internal communications can be powerful evidence during negotiations or court proceedings.
Final Words: Don’t Panic, But Act Fast
Facing offer cancellation after joining is unfair, stressful, and deeply disappointing.
However, you are not powerless.
You can pursue justice and restitution through a variety of legal alternatives.
Often, companies prefer settling when they realize that employees are aware of their rights and prepared to act.
The most important steps you can take are:
- Preserve all communication
- Act quickly
- Get experienced legal advice
If you have suffered losses after trusting an employer’s promise, you deserve to be compensated. Protect your future and career by standing up for your rights.
One can talk to lawyer from Lead India for any kind of legal support. In India, free legal advice online can be obtained at Lead India. Along with receiving free legal advice online, one can also ask questions to the experts online free through Lead India.
FAQs
1. Can I take legal action if my company cancels the offer after I have already joined?
Yes, you can take legal action under the Indian Contract Act for breach of contract, and also claim remedies under employment laws if the company cancels your offer after you have joined.
2. Can I claim compensation for relocation expenses if my offer is revoked after joining?
Yes, if you relocated based on the company’s offer letter and later faced cancellation, you can claim compensation under the doctrine of promissory estoppel and breach of contract principles.
3. Does the probation period clause allow companies to cancel offers without reason?
Not entirely. Even during probation, employers must follow principles of natural justice and cannot terminate employment arbitrarily or in bad faith. Reasonable cause is still required.
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