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Fire and Rehire Practice - ACAS Report Published

on Friday, 18 June 2021.

Following our recent update in this area, ACAS' report into 'fire and rehire' practices commissioned by the Department for Business, Energy and Industrial Strategy was published on 8 June 2021.

Why Was the Report Commissioned?

Fire and rehire practices have been a particularly topical area of employment law recently, gaining media attention after the practice has seen an increased use as a result of the pressures caused by the COVID-19 pandemic.

The report was therefore commissioned as a fact-finding exercise, and takes a number of opinions into account amongst the participants (which included stakeholders from: employer bodies, trade unions, professional bodies and networks with advisory contact with employers, covering employment lawyers, accountants, HR and payroll services, academics, and ACAS senior advisers) over the use of the 'fire and rehire' practice by employers.

What Is 'Fire and Rehire'?

The practice of fire and rehire (also known as 'dismissal and re-engagement') is a way in which an employer can bring about changes to the terms and conditions of employees’ contracts of employment. The process involves the employer giving notice to terminate their employees’ existing contracts, and offering re-employment on new terms and is generally used as a last resort where the change cannot be agreed with the employee.

ACAS Report Findings

The report noted a divergence in views amongst participants as to whether or not employers were using the pandemic opportunistically as a justification to force through changes to employment terms, or rather whether the increase in the use of fire and rehire seen over the past year was simply a fallout of genuine business pressures caused by the pandemic.  

The report found that views were equally mixed as to whether the practice should be reformed, and if so, how. Findings ranged from feelings that fire and rehire practices are never reasonable, and should be outlawed by legislation to, on the other side, those who believed that it could be useful when genuinely used as a last resort. There were also concerns that reforms, or a blanket ban could lead to less flexibility for employers, which could instead lead to failing businesses and redundancies.  

What Is the Outcome?

The Government has confirmed that it does not intend to legislate to outlaw fire and rehire practices at present. In his response to the report in the House of Commons, MP Paul Scully, Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy, confirmed that the expectation is that an employer should exhaust every avenue towards reaching agreement where it is necessary to change terms and conditions. However, due to the risk that reform in this area could result more businesses failing if they cannot amend terms of employment due to business necessity, the Government would not be outlawing this practice. The Government has instead asked ACAS to provide more detailed guidance on how and when termination and re-engagement should be used, and 'good practice' for employers. We therefore await this further guidance.

The Government have committed to continuing to work with ACAS on the issue, and Paul Scully also confirmed that "nothing is off the table."


If you would like guidance on implementing changes to terms and conditions of employment, please contact Ellie Boyd in our Employment Law team on 020 7665 0940 or complete the form below.

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