With ‘fire and rehire’ becoming an increasingly used practice for employers, we reflect on the risks of this approach and why it should be a last resort.
What Is ‘Fire and Rehire’?
There are many instances when you might need to change an employee’s contract of employment and there are a variety of ways of doing it.
However, when discussions break down over a proposed change, some employers have resorted to dismissing employees, and then offering continued employment on new terms. This practice is often referred to as ‘fire and rehire’.
In light of its increased use, ACAS have published new advice on making changes to employment contracts and in particular, the risks of adopting the practice of fire and rehire. The new guidance stresses this is an extreme approach to take.
You need to consider the risk of tribunal claims from employees who refuse the new terms. You also need to consider the risks and consequences of losing a substantial part of your staff if they refuse the new terms.
One recent Teachers’ Pension Scheme consultation that we did carried that very real risk for the employer. Several senior experienced teachers indicated they would refuse the new contracts and instead apply to work at other local schools.
Finally, do not underestimate the potential damage to staff morale as dismissing an re-engaging employees is almost certainly going to have a chilling effect on the employer/employee relationship.
For the above reasons the fire and rehire option should be treated as an last resort and we recommend you should try to keep discussions constructive, be open to exploring alternative options to reach a compromise and stay focused on trying to reach consensus.