A Spotlight on the Fire and Re-Hire Practice

Jun 23, 2021

The fire and re-hire practice has been used by many organisations over the past year to adjust to the ongoing pressures caused by the pandemic. British Gas and British Airways are just a few examples of high-profile organisations that have gained attention in the media for using this practice to make changes to their employee’s contractual terms.

Last year, the Department for Business, Energy, Industrial Strategy (BEIS) invited ACAS to conduct an independent fact-finding exercise on the increased use of this practice. This month, ACAS published their report which provides useful information of the practice by employers and offers comment on what interventions may be needed moving forward.

When to ‘Fire and Re-Hire’?

If an employer wants to vary an employee’s contractual terms, and the employee does not agree to the change, the employer may consider serving notice to terminate the employees’ existing contract and offer to re-employ them on the new terms. This is known as dismissing and re-engaging or, more commonly known as fire and re-hire. An employer should always consider the practicality of doing this as it could adversely affect an employment relationship and there is also a risk that an employee brings a claim for unfair dismissal.

ACAS Report

ACAS were invited to undertake a fact-finding exercise because of the concern around the growing use of fire and re-hire in practice. ACAS engaged with a number of stakeholders, including employers, trade unions, employment solicitors, accountants and academics, to explore their experience and views of how this method is being used.

The consensus was that the use of fire and re-hire has become a tactic to vary terms due to the increased pressures of the pandemic and the short time scales to adjust to them. There was, however, further concern that this would be used more once the business support available to employers has stopped.

There were mixed views around what measures to put in around the use of fire and re-hire moving forward. Some participants felt that it is not justifiable and should be prohibited whilst others suggested non-legislative measures should be put in place to discourage use such as ACAS guidance, publishing the use of fire and re-hire on Government websites to ‘name and shame’ organisations and other campaigns. Alternative legislative changes were also proposed, including:

• A reform on the law of unfair dismissal to tighten up around the use of fire and re-hire

• Making breach of contract claims actionable in employment tribunals

• Prohibiting use of wide contractual variation clauses

• Make breach of contract claims

Summary

Whilst this report is interesting, it has not provided any clear guidelines or suggestions around the use of fire and re-hire moving forward. ACAS also made clear that their findings cannot be treated as a representative picture and so employers should just be using this as useful insight into the issue and consider what some views are around reforms moving forward. It will be interesting to see whether the report prompts the Government to take action and, if they do, whether they will adopt any of these proposals. Given that the pandemic continues, this is unlikely to take place any time soon but may be something to watch out for in the future.

This ACAS report is a reminder for employers to carefully consider how to vary contractual terms. There are many things to consider including the business in question, the number of people affected and the change itself. We would always encourage to seek legal advice when changing terms and conditions to understand any potential consequences of a proposed change.

For further information or to discuss the issues raised by this update, please contact our Employment Group on 0118 977 4045 or employment@herrington-carmichael.com.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

Darren Smith

Darren Smith

Partner, Employment Law

Sign up

Enter your email address for legal updates on Employment & Immigration Law.

Please see our privacy policy regarding use of your data.


Employment Management Training Sessions

 

Darren Smith, a Partner in our Employment team, will be hosting a series of online training sessions looking at essential employment law for managers. Each session will be £79.95 + VAT.

> How to Avoid the Problems of Recruitment & Probation
> Equality, Diversity & Inclusion
> Absence Management
> How to Performance Manage
> Problems with Social Media & actions outside of the workplace
> Disciplinaries and Grievances
> Conducting a Fair Redundancy Process

Latest Insights - sign up to our Emailers

Our Emailers will bring you the latest news and insights from our legal teams as we look at the key talking points in life and in law.

Our insights will include articles, podcast discussion and information about our events and services.

You can sign up to as many as you wish and you can opt out at any time.

Sign up to our Emailers






Please see our privacy policy regarding use of your data.


Latest News & Insights

Podcasts

The Legal Room UK Podcast features a diverse range of specialists offering expertise on a variety of topics. 
Subscribe on whatever podcast platform you use.

Top Legal Insights

 

Contract Law

Material Breach of Contract

What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?

Property Law

Commercial Lease: The Financial impact on Landlord and Tenant

Coronavirus (COVID-19) and the restrictions now in place to control its spread, are having a significant effect on many business sectors.

Divorce and Family Law

Divorce in Lockdown: Can I get some discreet legal advice?

We have spoken to clients who are unfortunately experiencing some family issues, and would like to obtain expert legal advice, yet don’t know how...

Land & Property Dispute

Restrictive Covenants – The Price of Modification

Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?

Wills, Trusts and Probate

Why is having a will so important?

It is entirely up to you if and when you want to create a Will, but it is important to be aware of the consequences of not having a Will.

Award winning legal advice

Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.

London

60 St Martins Lane, Covent Garden, London WC2N 4JS 

+44 (0) 203 755 0557

 

Camberley

Building 2  Watchmoor Park, Riverside Way, Camberley, Surrey  GU15 3YL

+44 (0)1276 686 222

 

Wokingham (Appointment only)

4 The Courtyard, Denmark Street, Wokingham, Berkshire RG40 2AZ

+44 (0)118 977 4045

info@herrington-carmichael.com

© 2020 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.

Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority.

Privacy   |   Legal Notices, T&Cs, Complaints Resolution   |   Cookies   |   Client Feedback