Posted Thursday 1st July 2021
‘Fire and rehire’ is a controversial approach some employers take when they wish to change the terms and conditions of employees’ contracts of employment. The employer gives notice to the employee that their existing contract will be terminated and then offers them re-employment on new terms. The new terms are often more favourable to the employer and the tactic is generally used when employers cannot vary the terms of an employment contract by express agreement. This approach is also known as dismissal and re-engagement. Despite attracting criticism, ‘fire and rehire’ is not a new tactic nor is it unlawful.
Businesses may take the ‘fire and rehire’ approach to harmonise employees’ contracts across the business or to remove clauses that are undesirable to the business.
However, throughout the Covid-19 pandemic employer ‘fire and rehire’ tactics have become much more commonplace. Many businesses have seen a fall in their revenue during the pandemic, leading them to make redundancies or furlough their employees to save on costs. Employers who are keen to retain their employees may look to amend their employees’ terms of employment.
High-profile organisations, such as British Gas and British Airways, have recently used this approach to change their employees’ terms and conditions. Since last year, British Gas’ have been embroiled in a dispute with their engineers, resulting in numerous weeks of strike action. The engineers were asked to sign new contracts that required them to work longer hours but for no additional pay. In 2020, British Airways said they were using ‘fire and rehire’ tactics to streamline their workforce during the pandemic however it emerged that their workers were being offered worse terms of employments to retain their jobs.
The UK Government instructed ACAS to investigate the ‘fire and rehire’ approach. ACAS published their report on 8 June 2021. ACAS found that although ‘fire and rehire’ is not a new phenomenon, there is concern that once furlough and Covid-related business support initiatives end then ‘fire and rehire’ may become more extensively used. ACAS’ task was to fact-find rather than present recommendations to UK Government.
Nevertheless, the report suggested both legislative and non-legislative options for reform, including the following:
Whether the UK Government implement ACAS’ recommendations remains to be seen. The Government have indicated that they will not be introducing legislation to ban the use of fire and rehire.
The ‘fire and rehire’ approach does bring risks for employers, such as claims for unfair dismissal and breach of contract. Furthermore, particularly for high-profile businesses using the practice, it can lead to reputational damage and put a strain on employee and industry relations. Therefore, it is important to be aware of issues surrounding the use of ‘fire and rehire.’
Conversations surrounding amending employees’ terms of employment are often essential to businesses, yet they can be difficult and complex. Should you require assistance in this area, please do not hesitate to contact our Employment team.
This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.
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