Fire and rehire is the controversial practice of an employer firing staff and then offering them their job back on worse or different terms. This is most often a consideration in circumstances of redundancy or restructure.
P&O Ferries famously did this is in 2022, firing nearly 800 employees with little or no warning and replacing them with agency workers on lower pay which caused a public outcry. This led to a Government consultation and now we have a Code of Practice, the purpose of which is said to be (our emphasis added):
to ensure that an employer takes all reasonable steps to explore alternatives to dismissal and engages in meaningful consultation with a view to reaching an agreed outcome with employees and their representatives. The code also seeks to ensure that the employer does not raise the prospect of dismissal unreasonably early or put undue pressure on employees by threatening dismissal where this is not, in fact, envisaged.
From that excerpt you will see there is also concern that some employers pressurise their staff to agree such changes under the threat of their dismissal. It’s not uncommon at all.
Compliance with the Code requires transparency and early consultation from employers about potential changes to the terms of employment of their staff and for fire and rehire to be a genuine last resort.
What if there is non-compliance?
There is some criticism that the Code does not go far enough as it does not create a right for an aggrieved employee to make a standalone claim to an Employment Tribunal. An employee would need to complain about this alongside another claim such as unfair dismissal.
Where the Code applies, the Tribunal can either increase or decrease the compensation due to an employee by up to 25% depending on who was at fault.
Hasn’t Labour promised to ban this practice?
That’s right, Labour committed to ending this practice in its pre-election Manifesto. It also repeated this commitment in Parliament as part of the King’s Speech, although it remains to be seen to what extent it will strengthen the protections of this Code and what the impact will be in practice.
Whether because of the Code or the Court of Public Opinion, employers may well think more carefully about their approach to fire and rehire in the future.
This blog was written by Ben Lindsay, Solicitor at didlaw.
