The subject of employers adopting fire and rehire practices has been in the spotlight a lot in recent months and has drawn much negative publicity.
Just last week, workers at Weetabix factories in Kettering and Corby said they are stepping up strike action in an ongoing dispute over alleged fire and rehire tactics. Some workers have already been staging strikes since September on every Tuesday and Wednesday, as they have claimed that if they are dismissed and then rehired by Weetabix it could potentially mean that some employees could end up being as much as £5,000 per year worse off.
What is a fire and rehire approach?
Fire and rehire, which is more properly referred to as dismissal and re-engagement, is the practice of terminating an employee’s contract of employment and at the same time, offering to re-employ them on different terms of employment.
Whether a dismissal and re-engagement process is a fair approach for an employer to adopt, will depend on whether the employer has properly consulted with the affected employees on the changes that they intend to make. Provided an employer has followed a fair process, employees who unreasonably refuse an offer of re-engagement, will not succeed in an unfair dismissal claim against their employer.
An Employment Tribunal will assess each case on its own facts and the employer will have to show why the changes were necessary and that it has followed a fair procedure and properly consulted with affected employees.
Government blocks new law to prevent fire and rehire practices
Although the Government has previously referred to fire and rehire tactics as “unacceptable” and indicated that it would “take action”, it blocked the introduction of new rules which would prevent businesses from dismissing staff and then taking them back on alternative pay and terms in October.
Instead of legislating, the Government asked Acas to produce guidance to help employers explore alternative options first before contemplating fire and rehire practices to alter employee contracts.
Acas guidance to help employers avoid fire and rehire practices
Acas published its guidance for employers last week.
The guidance is designed to support businesses in maintaining good working relations and reach agreements with workers if they are considering making alterations to contracts of employment.
Acas has advised that fire and rehire practices are an extreme step that can have a detrimental impact on staff morale, productivity, working relations and could result in strike action, as has been the case with Weetabix workers, or, in some instances, unfair dismissal claims from workers.
The guidance recommends that before considering or introducing fire and rehire practices, businesses should fully consult with all affected employees and their representatives in a genuine and meaningful manner. This will hopefully mean that staff can understand the reasons behind proposals being considered and provide them with the chance to give their views.
The guidance also goes on to state that should both employer and employee have difficulties in coming to an amicable resolution then both parties should try to keep discussions constructive, consider alternative options to reach a compromise and remain focused on trying to reach an agreement.
Susan Clews, Chief Executive of Acas, said:
“Our new advice is clear that fire and rehire is an extreme step that can seriously damage working relations and has significant legal risks for organisations.
“Employers should thoroughly explore all other options first and make every effort to reach agreement with staff on any contract changes.
“Organisations that consult with their workforce in a genuine and meaningful way about proposed changes can help prevent conflict at work and stay within the law.”
For now, despite the Acas guidance, dismissal and re-engagement processes remain a fair and legal way for an employer to approach the issue of essential amendments to terms and conditions of employment. There may be many businesses that need to impose changes to survive the potential long-term impact of the pandemic and this is an option that they may want to consider.
The legal requirements to successfully undertake a dismissal and re-engagement process are complex and employers should consider any arrangements carefully before they undertake this approach.
In addition to this, as with this case involving Weetabix and also Clarks workers, the impact that this approach can have on employee relations should also be considered. Not just for the staff directly impacted but for other employees too.
This political and media backlash in recent months means that employers also need to consider the adverse PR consequences that could come with the use of fire and rehire practices and take this into their considerations.
How Nelsons can help
If you would like any advice concerning the subjects discussed in this article, please contact Laura or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.Contact us