All businesses evaluate their staffing needs but some might also decide they need to go a step further to help make changes to employment terms and conditions. Sometimes this is done by dismissal and re-engagement on new amended terms.
Whilst this can help to avoid redundancies for businesses genuinely struggling to meet costs, it can also be used to create consistency of terms and conditions between different groups of employees, perhaps brought about by a previous merger or just developed over time, where disparities have crept in. It can also help to increase flexibility in employment contracts as business models change and adapt to new markets and opportunities.
This so called fire and rehire strategy is often controversial and it can be unsettling for employees, so it is recommended that it is only used where there are no other options available to the employer.
Due to an increasing number of employers using this fire and rehire practice since the start of the pandemic, the Government asked ACAS to conduct an investigation into fire and rehire, why it was being used and for their guidance for employers using it.
This guidance has now been published and it highlights how fire and rehire can damage employee relations and trust and increase stress for employees, which can result in increased absence or sick leave. It can also lead to the loss of valued employees and their knowledge if they decide not to re-join the firm and this policy could increase the risk of discrimination, unfair dismissal, breach of contract or constructive dismissal claims.
Acas are therefore advising that fire and rehire should only be used by business leaders as a last resort and they highlight there are a number of other ways that employers can amend and implement new terms of an employment contract. These include:
• Consider if cost savings can be made elsewhere in the business first.
• Consult with employees about proposed changes and listen to their feedback and suggestions.
• Offer additional staff benefits to employees for agreeing to changes, for example increasing hourly rates for working different shifts.
• All changes need to be made with employees’ agreement, but employee actions may also count as agreeing for example willingly working different hours.
• Where a business meets resistance from staff they should keep discussions ongoing and explore other ways to reach a compromise.
If you are considering ways to implement significant changes within your business, you should also check if your employment contracts contain a flexibility clause which would allow you to make reasonable changes to some of the conditions of employment.
If you decide that fire and rehire is the route you will take, you should ensure you:
• Follow a fair dismissal process
• Give employees sufficient notice (check what is in their contract and what is statutory and it is advised to give them whichever is the longest)
• Offer employees a right of appeal against their dismissal
There is clearly much to consider here and many things that an employer can get wrong, so get in touch to discuss the most appropriate way to achieve any changes within your business.