VIEWPOINT MYTH-BUSTING ABOUT
“FIRE AND REHIRE” Tina Chandler of law firm, Wright Hassall on a dubious employment practice
IN THE AFTERMATH of the COVID-19 pandemic, businesses are understandably keen to restructure, so they can overcome the economic challenges they currently face. In many cases, this involves renegotiating contractual terms with existing employees, which can be a difficult process for a variety of reasons. One of the key challenges is getting the individual in question to accept the proposed alterations. As a way around this, some businesses are utilising the “Fire and Rehire” tactic, whereby employers dismiss employees (with contractual notice), and then offer them new employment on revised terms.
Whilst the practice is not technically illegal, there is a lot of controversy surrounding its morality, especially as it becomes more prevalent across a range of sectors, including construction. As such, the practice has generated a lot of media attention in recent months, so it is important that employers and employees familiarise themselves with the legal aspects of “Fire and Rehire” too.
Is it legal?
Whilst it is common practice in the UK, this is not the case for the rest of the continent, with countries like Ireland, Spain and France all banning it. According to recent statistics, almost one in ten UK workers have been forced to reapply for their jobs on worse terms and conditions, or risk being let go permanently. Those facing the greatest risk are employees with less than two years’ service, as generally speaking, they have limited rights compared to those who have worked at a business longer. Lately, however, there is a growing perception that the pandemic has been used as a smokescreen to reduce workers’ rights.
Unite have been highly critical of 18 “
Fire and re-hire should not the first course of action, instead, it should be used as a last resort.
”
the practice, specifically citing the inequality this creates for employees at a time of immense hardship in the aftermath of COVID-19, during which generous Government support was continually provided for employers, including arrangements like the Coronavirus Job Retention Scheme.
Statistics gathered by the GMB union back this sentiment by showing that three quarters of people think “Fire and Rehire” should be outlawed. Nevertheless, for now, the practice remains as an option for employers dealing with a thorny issue.
When is it used? Rightly or wrongly, “Fire and Rehire” is applied in a variety of situations by employers; there isn’t a uniform perspective on when it is, or isn’t, reasonable use. Circumstances of use may include:
• Wherever employers are conscious there may not be a genuine risk of redundancy in existence;
• Where employers want to reduce the number of redundancies, or are looking to try and save on costs, whilst retaining the knowledge and skillset of their workforce;
• When negotiations regarding an employees’ terms and conditions break down;
• When employers seeking to harmonise the terms and conditions of employees; or • If employers are hoping to introduce flexibility into contracts, e.g. to react to consumer demand/ to reflect change in the area of business.
What are the risks? When employers want to change an employee’s terms of employment, there is often no simple solution. If the desired changes bring about detriment to the employee, all options have risks for employers and are likely to be resisted by employees (and their unions).
Terminating an employee’s contract and offering them a new one on reduced pay or benefits could leave employers open to Employment Tribunal claims. Dismissed employees, if they have the requisite length of continuous service, could bring claims for Unfair Dismissal/ Constructive Unfair Dismissal. Employees could also bring claims for breach of contract or unlawful deduction of wages claims in the civil courts and Employment Tribunal respectively.
If employers fail to provide the relevant statutory/ contractual notice period during the process, they could also face claims of Wrongful Dismissal.
Plus, let’s not underestimate the potential damage to a business’ reputation with websites like Glassdoor in existence allowing prospective new recruits and customers observe employer’s treatment of employees and workplace culture. Indeed, 67% of voters in a GMB union survey indicated that they would be less likely to use businesses who had employed the use of “Fire
and Rehire”, which could have long-reaching repercussions for employers.
Amy other options? The key thing for businesses to remember is that “Fire and Rehire” should not be the first choice of action, instead it should be used as a last resort when the contractual changes are deemed absolutely necessary.
Before going down this route, employers should first check if there is a flexibility clause written into contracts, as this may allow them to make reasonable changes. However, employers should still exercise caution, as many unilateral amendments cannot be imposed regardless of the clause being included. Employers should only opt to proceed with dismissing and rehiring employees once they have considered all other possible options, assessing both the risks of legal action, and the impact on employee engagement and morale. In terms of the process, ACAS recommends that, they follow a fair dismissal procedure, give employees sufficient notice (statutory or contractual, whichever is longer) and offer employees the right to appeal. In essence, although “Fire and Rehire” is legal, it could be considered morally questionable and employers need to be confident that taking such action, on balance, is worth it. BMJ
Tina Chander is a Partner and Head of the Employment team at leading Midlands law firm, Wright Hassall. She advises in connection with a variety of employment law matters, including all aspects of employment tribunal proceedings and appeals.
www.buildersmerchantsjournal.net September 2021
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