Can Employers 'Fire and Re-Hire' Employees on Varied Terms?

Employers may adopt this approach to enforce a change of terms and conditions where they have been unable to agree the proposed change with the employee. Although the practice itself is lawful, because it involves a dismissal there is invariably a higher degree of risk involved.

Unions have previously advocated to outlaw this practice and following its increased use by employers to vary terms of employment in response to the coronavirus (COVID-19) pandemic, the practice has been receiving more scrutiny.

ACAS was asked by the Government to gather evidence and report on the use of fire and re-hire. The report was submitted to government ministers on 17 February 2021, and the government response is still awaited.

On 25 May 2021, MPs debated when the Government intends to publish the report and its response. Without giving much away, Paul Scully MP confirmed that the report was being given full consideration by the Government and that next steps will be communicated in due course. He did however comment that it was necessary to tread carefully when considering government intervention in commercial contractual matters between employers and employees.

How Does This Affect Employers?

ACAS guidance emphasises that employers should be cautious when firing and re-hiring and only adopt this approach when necessary and if all other attempts to agree varied terms have been exhausted. When moving to terminate and re-engage, employers should ensure they have followed a fair dismissal procedure - including:

• ensuring there are sound business reasons for the change
• engaging with affected employees
• considering alternatives prior to deciding to dismiss
• offering a right of appeal.

This practice may also trigger collective consultation obligations where it is possible that more than 20 employees may be dismissed.

The government response to ACAS's report is awaited but in the meantime, employers should be mindful that this area is under heightened scrutiny at present. We will keep you updated on further developments.

If you are an employer who would like further advice on fire and re-hire tactics and whether you could be subject to potential claims by employees, please contact Ellie Boyd in our Employment Law team on 07393 148143 or complete the form below.