Fire and Rehire Employment Tactics and New Legislation pending

 

Ashley Hunt, Director and Employment Solicitor
Lawson West Solicitors, Leicester

 

Weetabix in Northamptonshire has been in the news recently as a large employer who sought to renegotiate the terms and conditions of some of its engineering employees. This activity was challenged by the Trade Union Unite as a ‘fire and rehire’ scheme.

What is a Fire and Rehire scheme?

• A fire and rehire scheme is simply where an employer asks an employee to agree to changes to their contract of employment.

It is important for employees to look at their contract of employment and any associated handbook to see what terms and conditions can be changed unilaterally (i.e., without the employees’ consent). For any terms and conditions that require consent, and the employee does not wish to consent to those changes, the employer will often suggest that it will simply dismiss the employee for refusing the changes, and then offer them re-employment under a new contract of employment which contains the terms which they had wanted to include in the employee’s older contract.

Clearly, one of the options available to employees in these circumstances is to take industrial action, which the affected employees of Weetabix chose to do from September to November 2021 through their union Unite. The purpose of this was presumably to bring the employer back to the negotiating table to help find a compromise that worked for both parties. The story was picked up in the national media.

Where industrial action fails (or is likely to fail) to achieve a compromise, the employer may continue with its fire and rehire tactic.

The employee then needs to consider what their options are. Ultimately, there is very little realistic prospect of stopping a dismissal before it happens, so the employee will have to rely on a claim for unfair dismissal in the Employment Tribunal. The reason for their dismissal is likely to be their refusal to agree to the employer’s proposal, which the employer is likely to call a reasonable request. This could fall under the fair dismissal category of conduct or, more commonly, ‘some other substantial reason’ (SOSR).

The employer will still need to be able to justify that the dismissal was fair, which will usually involve looking at the employer’s reasons for imposing the changes and what alternative options were available to them. Ultimately, this will be a fact-sensitive consideration for the Employment Tribunal, so each employee’s prospects of winning their unfair dismissal case will be different.

During the pandemic, several high-profile disputes have emerged around the use of fire and rehire at employers including British Airways, Centrica (British Gas), Tesco and Sainsbury’s (Argos).

A January 2021 poll for trade union umbrella body the Trades Union Congress estimated that 9% of workers had been the victim of fire and rehire tactics since the first lockdown in March 2020, having been told to re-apply for jobs on worse terms.

 

ACAS on the subject of Fire and Rehire

Following calls to improve best practice guidance on the subject, in November 2021, the arbitration service ACAS issued their findings on ‘fire and rehire’ tactics. They warned employers:

“Our new advice is clear that fire and rehire is an extreme step that can seriously damage working relations and has significant legal risks for organisations.”

“Tensions can arise if employees feel that they have not had the opportunity to inform decisions around proposals or do not support the changes.”

“ACAS advises that the practice of fire and rehire is an extreme step that can damage staff morale, productivity, working relations and can also lead to industrial action.”

Law on the subject of Fire and Rehire

The current Employment Act 2002 is the legislation governing employment contracts and employee rights. However, in June 2021, Labour MP Barry Gardiner aimed to progress The Employment and Trade Union Rights (Dismissal and Re-engagement) Bill, which specifically dealt with the issue of fire and rehire.

The Bill, which is supported by over 20 trade unions, aims to:

1. Introduce a new duty for employers to consult employees in certain situations when they might be looking to dismiss or change the work terms of 15 or more employees. Any changes to an employment contract aren’t valid unless this consultation was done;

2. Provide additional employee protections, by:

• • prohibiting employers from including in employment contracts a right to vary terms in ways less favourable to employees, without employee consent; and

  • making it easier for employees to bring claims for “unfair dismissal” in cases of fire and rehire; and

  • provide additional legal protections by making it easier and quicker for industrial action to be taken in cases of fire and rehire.

1.  

The new Bill is on its second reading through Parliament and debate is due to continue on 18 March 2022, so we look with interest to see the next phase in this vitally important legislation.

 

If you are affected by a Fire and Rehire tactic by your employer, or you’re an employer wishing to introduce new employment contract terms, or a Trade Union representative looking for legal insight, then please contact Lawson West for help and guidance on this subject. Our legal service is national. Contact Us.

View all