‘Firing and Re-hiring Employees– Employment Law’s Dirty Secret

Dismissal and re-engagement – or ‘firing and re-hiring employees’ to use more recent terminology – has long been something of a dirty secret in employment law. It describes a practice which starts when an employer decides that they don’t like the terms of an employee’s contract.  The employer will usually attempt to persuade the employee to agree to new terms through consultation. However, if they refuse the employer has the option of terminating their current contract and replacing it with a new one.

When I used to advise employees that this was a possibility, they were often incredulous. What, after all, is the point of a contract if an employer can simply rip it up when it doesn’t suit them and replace it with a new one?

Firing and re-hiring employees has had something of a moment recently and it is not difficult to see why. The economic circumstances of the pandemic are forcing employers to make difficult decisions which usually involves reductions to the wage bill. Conventionally this involves redundancies but firing and re-hiring offers a potentially attractive alternative, i.e., getting the same employees to do the same work but for less money. Recent research by the TUC has found that 1 in 10 workers have been forced to reapply for their own jobs during the Pandemic and that younger, black and minority ethnic workers are more likely to be affected.

The issue has recently come to a head in the increasingly bad-tempered dispute between Centrica (formerly British gas) and its engineers, represented by the trade union GMB. Centrica want the engineers to agree to work longer hours for the same money and have threatened to fire and rehire those who refuse. The engineers have taken industrial action pointing to the underlying profitability of the Company.

The engineers are fortunate to have the support of a well-organised trade union in this dispute. It’s fair to say that the situation is more difficult for an individual employee when faced with the threat of firing and re-hiring. So, does the law offer anything in the way of protection?

Well, yes and no. The law does allow employers to dismiss and re-engage but they must serve whatever notice is due under the contract of employment before a dismissal can take effect. Where the process involves 20 or more employees they must also collectively consult with staff representatives. And even where an employer can jump through these hoops an employee may have an unfair dismissal claim if they can show that the employer did not have a legitimate business reason or did not act reasonably overall.

So, there are a lot of risks for employers and not least of these is bad publicity where the process is played out in public. Like all dismissals, firing and re-hiring employees should always be considered as a last resort – there are usually better ways.

This blog is brought to you to by Mark Alaszewski, Solicitor at didlaw