What is Fire and Rehire?
With the Queen due to make a speech on Tuesday 11th May, reports have suggested it will contain more than 25 bills, or proposed pieces of legislation. Boris Johnson is currently urging the government to announce a new legislation that will stop ‘fire and rehire’ and hopes it will form part of the Queens speech.
Fire and Rehire explained
Recently British Gas used the fire and rehire approach in changing their employees’ terms of employment and in doing so came up against criticism from unions.
An employment contract is no different to other contracts, consequently a contract generally cannot be changed without the agreement of each party.
Under current law an employer can vary terms in an employee’s contract if the contract contains a clause that allows them to do so, including pay, hours of work and benefits as long as the employee suffers no detriment. This could be a flexible clause or variation term. An employer can also force an employee to agree to a new contract but the risk of legal action is high.
When an agreement cannot be reached the employer can end the contract and rehire someone else on the new terms and conditions. This is a last resort, is currently legal however it does come with the potential risk of a tribunal claim, if not handled correctly.
Fire and rehire is currently banned in Ireland, Spain and France
How do I change my employees’ terms of employment?” There is no single answer, and, assuming that the change involves the employees being worse off, then all the options have risks. You are unlikely to have any difficulty if for instance if you offer employees better terms, for example a pay increase.
If an employer proceeds to firing and rehiring, they must do the following.
- Fairly dismiss the employee from their current contract. They must have a fair reason and follow a fair process accordingly.
- Provide the employee with enough notice e.g. contractual or statutory notice (1 week for every year worked up to a maximum of 12 weeks).
- Consider the legal risks of doing so as an employee can potentially take a case to a tribunal and claim, breach of contract or unfair dismissal. To make a claim the employee must have two years continuous employment with the employer and they must bring the claim within 3 months of termination date.
Fire and rehire is potentially lawful, it can be a high-risk strategy which employers should not take on without understanding the risks involved
If you are an employer who wants to make contractual changes and needs more advice, Tick HR Solutions can help. All your HR decisions can be made with confidence reducing stress and time. Call us today.