The government has confirmed that it will not yet legislate to prevent so-called “fire and rehire” practices. Instead, it has asked Acas to prepare more detailed guidance on how and when dismissal and re-engagement should be used.
Where employers wish to make changes to the terms and conditions of employees’ contracts, they have various options. Ideally, the employer will be able to reach agreement with employees over the changes, either by consulting individually with employees or with appropriate representatives. However, where agreement is not forthcoming, the employer can either unilaterally impose the change or terminate the employees’ existing contracts and offer re-employment on new terms (the latter practice has recently been commonly referred to as “fire and rehire”).
History of fire and rehire
The use of fire and rehire is not new. Although it has become a focus of attention during COVID-19, the practice predates the pandemic by many years and is widespread across a range of industries and sectors. Some participants in a recent Acas review felt that the practice appears to have been used more widely as a negotiating tactic during the pandemic, although others suggested that wider use may be linked to the genuine and significant business challenges posed by COVID-19. All participants acknowledged that use of fire and rehire may increase as the furlough scheme and other support measures are wound down.
There are many circumstances in which participants reported using fire and rehire, both before and since the pandemic. These include redundancy situations (including to minimise job losses), to harmonise terms and conditions, to introduce permanent or temporary contractual flexibility, to interrupt continuity of service, and to address changing customer or operational needs.
Use of fire and rehire
All participants emphasised the scale of the business challenges posed by the pandemic. Not all employers have resorted to fire and rehire, and there have been many examples of employers collaborating with their workforce to find suitable adaptations. However, concerns were expressed that some employers were using the crisis as a smokescreen to diminish terms and conditions, with fire and rehire being seen as a tactic to undermine workplace dialogue. There were similarly mixed views on whether fire and rehire was reasonable outside the context of the pandemic. Some participants regarded it as always unreasonable, while others believed that it could be reasonable sometimes (for example, as a last resort or if driven by genuine business need).