The fire and rehire controversy

In recent times, the practice of “fire and rehire” has courted much discussion, both in Parliament and the press. It follows actions by companies such as British Gas, British Airways and Tesco in seeking to change employees’ contract terms by ultimately terminating their current contract and offering a new one on less favourable terms.

The practice of fire and rehire is not a new concept by any means, it has been a practice in place for many years. It seems to have become more public since the Covid pandemic which resulted in some businesses having to change the way in which they work or seek to reduce overheads.

In October 2020, the Government commissioned an investigation by ACAS into the use of fire and rehire and to explore what might be done to reduce their use and/or impact. ACAS consulted with Trade Unions and professional bodies and opinions varied widely as to its use. Some felt that the use of the practice of fire and rehire should be banned altogether, whilst others thought that the practice was necessary, and the balance was about right.

There were concerns that its use was heavy handed, and employers were going straight for fire and rehire without workplace communications and using Covid as an excuse. The Prime Minister and other government ministers have stated that use of fire and rehire is unacceptable and immoral. However, for all the calls to ban the practice, and the expressions of dissatisfaction, there are no plans to introduce any legislation to prevent it.

With any employment contract, the starting position is that they cannot be changed without agreement. Where agreement isn’t immediately reached, if there is a genuine business need to make changes, employers must consult with staff about the proposed changes and the reasons for them, with a view to seeking agreement. Where the changes affect 20 or more or 100 or more employees, collective consultation is needed with either Trade Unions or employee representatives.

If consultation and negotiations are unsuccessful, employers may potentially give notice to terminate the existing contract offering new terms to start after notice has expired.

It really is a balancing exercise between the employer needs and the employee rights. There are going to be circumstances where a business genuinely needs to make changes to terms and conditions to save costs and, ultimately jobs. The alternative outcome being either a business closure or redundancies. However, as with all employment matters, process is key. Communication and negotiation are vital and should be the starting point and failing to follow a process will lead to claims. It is always preferable to reach an agreed compromise. Fire and rehire should really be the last resort.

We will be dealing with the practice in more detail at the Battens Eat Lunch on “Changing Contract Terms”, taking place on Tuesday 23 November via Zoom. If you would like to attend the webinar on 23 November, please contact louisa.dustan@battens.co.uk

For more information on this or any other employment topic please contact Head of Employment Dawn Gallie on 01935 846233 or email dawn.gallie@battens.co.uk