Fire and rehire – is it ever acceptable?

There has been a great deal of scrutiny in recent months of an established, but controversial, workplace practice.

‘Fire and rehire’ has been the approach taken by some employers during the pandemic to bring about changes to employees’ contracts. The idea is that where an employee won’t agree to work under different terms and conditions (different hours or reduced pay, for example), the employer could bring their contract to an end and immediately reissue a new contract containing the new terms. It is for the employee to decide whether to accept them or not.

Acas has this week published findings on the use of fire and rehire and says it will be producing more guidance to help employers understand good practice when negotiating changes to staff contracts. There is no question that contractual changes that leave employees in a worse position may need to be made from time to time (and Covid has pushed many businesses to the edge, forcing them to consider ways of avoiding redundancies and all-out closure). But there is concern that, alongside the unsavoury idea of effectively holding employees to ransom under a fire and rehire strategy, some employers may be using the pandemic as a way of putting workers on less favourable terms and conditions.

A genuine business need should be at the heart of any contractual change that would worsen an employee’s position. Ideally, by explaining that business need, an employer will get the employee’s agreement to the change. But changes can’t be forced through without there being some risk attached. Breach of contract is one. And in a fire and rehire scenario, an employee with at least two years’ service could claim unfair dismissal, even though you had offered to re-employ them straightaway.

These can be extremely difficult issues for employers to navigate. What is clear, however, is that fire and rehire should be a last resort; something to consider only once all alternatives have been explored. Employers who see contractual change as a necessary step to take should carefully consider:

-         what this would mean for employees

-         what it would achieve for the business

-         what other options exist

-         how best to consult with staff over the proposed                       change (proper consultation is vital)

-         how to minimise the risk of claims and damage to the               business’ reputation

For advice about changing employees’ terms and conditions, or any other Employment Law issue, contact us on 01264 353411 or email info@bsandi.co.uk.