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Fire & Rehire – new guidance published

ACAS have recently published new guidance on employer’s responsibilities for what is referred to as ‘fire and rehire’ practices, following a government consultation.

This practice is most typically used when employers are seeking to revise the terms of an employee’s contract to, usually less favourable terms, and the employee is unwilling to agree to the new terms.

The guidance aims to assist employers to consider all other available options from the outset to avoid the need to engage in the ‘fire and rehire’ process. It encourages employers to consider what issues they are looking to solve and whether a contractual change is definitely required to solve it. In doing so, this will help employers to clarify what it is they are seeking to achieve and the various alternative options that may be considered.

The guidance recognises that employers on occasions may need to make changes to terms and conditions for business reasons; however, the guidance highlights the potential risks employers may face when this process is not managed or followed correctly. Some of these include:

  • Claims for e.g. breach of contract, discrimination or constructive dismissal;
  • A decline in morale, performance and commitment from staff;
  • Increased absence rates and stress levels;
  • Loss of valuable team members due to a lack of support for the changes;
  • Damage to the company’s reputation, causing future recruitment issues;
  • Potential strikes or industrial action where trade unions are involved.

The guidance aims to assist employers to understand their options before considering a change for all employees. Employers should looking at the number of employees potentially affected and whether the company has a recognised trade union or any other established procedure for consulting employees.

It is important to emphasise that if a contractual change is required, employers should seek to preserve, as best they can, the working relationships they have with their employees throughout the process. Employers should ensure that they explore any alternative options suggested by their employees during the consultation process and remain mindful that the consultation process must always be a genuine two-way discussion about whether a change is needed and what kind of change is appropriate.

It is important to note that where any proposed change is covered by a collective agreement, consultation with the union signatories will be required.

If employers are finding it difficult to reach agreement with their employees or their trade union on the proposed changes, they could consider adding an incentive, such as adding in a more beneficial term to compensate for the less attractive term or ‘buying out’ the term in question. In addition, the guidance also provides other suggestions, such as implementing the change gradually to make the proposal more attractive.

If the proposed changes cannot be agreed, and the employer considers that they are definitely required for good business reasons, the employer may give notice of the changes and offer to rehire employees on the revised terms. This should only be considered as a last resort after taking all reasonable attempts to reach an agreement, due to the potential risks highlighted above, and whilst ensuring that a fair process has been followed.

The full guidance published by ACAS can be read here.

If you have any questions on how to make changes to the terms and conditions of an employee’s contract, require training on changing terms and conditions or any other employment law queries, please contact our Employment team on 01228 552600 or 01524 548494

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