What is fire and rehire?
Fire and rehire is generally used when an employer wants to make changes to an employee’s terms and conditions of employment but they haven’t been able (or in some cases haven’t tried) to get consent from the employee. We prefer to use the term dismissal and re-engagement.
It’s unusual to proceed without consent because consultation usually resolves issues and finds common ground. However, without consent, revised terms can in principle be implemented by dismissing the employee and re-engaging them on the new contract with the amended terms and conditions.
The fire and rehire method is particularly draconian as it removes the opportunity for meaningful consultation and is really a last resort. However, the controversial actions of P&O Ferries and Tesco have increased the spotlight on this practice.
P&O Ferries dismissed nearly 800 crew members with immediate effect in March 2022. They failed to enter into any consultation with their staff (which is contrary to employment legislation) and replaced them with agency workers whose wages were significantly lower. Although a slight departure from the traditional fire and rehire process (it was really just a case of firing), their actions nevertheless highlight the problems that employers face when failing to consult with staff or follow the correct procedures. As a result, they have faced backlash from their former staff, the public and the government.
In March 2022 the High Court held that Tesco’s proposed actions of dismissing and re-engaging 42 staff to deny them of their right to retained pay (which they had been told was guaranteed for life and incorporated into a collective agreement) was unlawful and therefore imposed an injunction preventing them from doing so. This case clearly represents a development in the law when it comes to permanent benefits and is likely to be a case that employees will seek to rely on in cases that share similar facts.
In November 2021, Acas issued guidance and reinforced their position that the fire and rehire option should remain an absolute last resort rather than being used as a method to avoid consulting and seeking agreement with employees and workers. They went so far as to refer to it as an “extreme practice that has significant risks”. The Government has gone a step further and announced on 29th March 2022, that they will be introducing a new Statutory Code setting out practical steps that employers must follow.
If you would like further advice or assistance with making changes to your employment contracts, please don’t hesitate to contact us.