In June 2021, the Government asked Acas to prepare detailed guidance on the practice of dismissal and re-engagement (commonly known as “fire and rehire”). This has now been published. You can access the full guidance here.
Talking is key. In summary, the guidance sets out ways to help employers avoid fire and rehire practices and recommends that employers consult with their employees “in a genuine and meaningful way” when considering making changes to their employment contracts to ensure that a good relationship is maintained. Acas advises that dismissal and re-engagement is “an extreme step,” and is ultimately damaging to the business so best avoided if possible. Unilateral changes are also likely to impact staff morale and may affect a business’s ability to retain employees and recruit.
Are there any legal protections for employees if they are fired and offered new contractual terms?
Yes. If an employee has two years’ continuous service, then they may have a claim for unfair dismissal if their employer did not have a legitimate business reason and failed to follow a reasonable process. If the changes to the contract are deemed to be discriminatory then an employee may also have a claim under the Equality Act 2010.
I am not sure whether the guidance will make employers think twice about fire and rehire practices. However, with the Government recently blocking the Employment and Trade Union Rights (Dismissal and Re-engagement) Bill, which was set to introduce legislation to prevent employers from enforcing less favourable terms of employment, I hope employers use the guidance to help them to have these discussions in a more collegial manner.
This update was written by Jo Sinclair, Solicitor at didlaw.
