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The pandemic has seen companies use fire and rehire tactics to force employees into accepting different, and in some cases worse, terms and conditions of employment. It could be reduced pay, a decrease in holiday/sickness allowances, or substantial changes to their working hours or shift patterns.

What is it?

Fire and rehire happens when business owners/managers want to align employees’ contracts to new business models and their employees don’t agree with the proposed changes. Whilst not illegal, the controversial practice has been condemned by many. It’s also worth highlighting the fact that fire and rehire carries risks, these include:

  • Damage to working relations
  • Reduced staff morale
  • Increased stress
  • Reduction in performance levels
  • Claims for breach of contract, unfair dismissal and failure to consult
  • Harm to an organisation’s reputation

Consider other options first

Taking all of this into account, ACAS have set out new guidance to help employers explore all other options first before using fire and rehire tactics to change employee contracts.

If you are considering contract changes, here are some useful pointers:

  1. Look carefully at the issues you are trying to solve and consider whether they can be answered by making changes elsewhere in the organisation.
  2. If changes are still necessary, then make sure you consider how best to communicate the changes, including the methodology used.
  3. Fully inform affected staff and their representative and unions in a timely manner and with clear information.
  4. Consult with all employees and their representatives in a genuine and meaningful way.
  5. Keep all communications constructive and if consensus is not reached, encourage alternative options to find a compromise solution where possible.

Thorough consultation process

Of course, there may be situations where it’s both reasonable and necessary for you to amend your employees’ contracts. If for example you need to reflect a change in job role, ensure contracts are up to date with new laws or regulations, take account of a location move or introduce updated terms and conditions like enhanced maternity or paternity pay.

In these circumstances, we encourage positive engagement and a thorough consultation process with all employees who are impacted by the changes. When communicating with them, ensure information is communicated in a way all employees will be able to understand, taking into consideration any disabilities or language barriers. Failure to do so may give rise to a discrimination claim.

Sometimes reaching an agreement is not always possible and it is only then that an employer should use fire and rehire as a last resort. If you terminate an employee’s contract that amounts to dismissal, so you need to ensure you have followed a fair dismissal procedure where you have provided:

  • A fair reason for the dismissal
  • The correct amount of notice
  • Offered a right of appeal

How can we help?

If you need further help in weighing up the risks and advising on strategic steps to take, please contact caroline.robertson@actifhr.co.uk for non-obligatory advice.