What is fire and rehire?

Dismiss and re-engage, or fire and rehire, has been a practice for decades but recently has been receiving coverage in the press as a result of its use by high profile companies such as BA and British Gas, who have seen the coronavirus pandemic having a dramatic impact on their cash flow. An employer who finds itself in difficulty may see no alternative but to change the terms and conditions under which they have engaged their employees for example by reducing wages, or holiday allowances, or altering shift patterns or other work place agreements in order to try and cut costs.

The usual course of these changes would be to discuss them with the employee or their representatives, find an acceptable agreement and agree to its implementation. But when agreement cannot be reached between the parties, employers may choose to dismiss the workers in question and offer to rehire them back on the same day under the new terms and conditions in order to unilaterally impose the change.

In using this practice, employers should be aware that the relationship between them and their employees, already potentially damaged by the difficult negotiation process, can come under additional strain and as such it should be seen as a last resort option only.

Unions oppose the practice as it is contrary to an employee’s rights under the contract. It can also erode the ability of workers to bargain collectively, with the GMB union and others calling for a ban on the practice. While there has been some pressure for legislation in this area the practice is not illegal (although claims such as unfair dismissal may arise if the practice was used unreasonably for example) and practice has been defended on the ground that firms in financial difficulty must be granted flexibility to offer new terms.

For an employer who wishes to use fire and rehire to change conditions, it is very important to act cautiously and with proper contemplation of the myriad of outcomes (both intended and unintended) that may occur as a result of the practice.   In order to safely impose fire and rehire employers should strongly consider providing plenty of advance notice to the workforce, undertake a formal consultation and allow meaningful engagement by the employees.  Other alternatives should be considered and typically, only where the employees are unreasonably refusing to renegotiate should the practice be applied. Failure to follow this process may result in an employer facing legal challenge typically by way of an unfair dismissal claim.  It is also possible that claims of discrimination may arise depending on how the process has been applied. 

Please contact us if you would like more information about the issues raised in this article or any aspect of employment law.