Fire-and-rehire: Acas paper
Employers have several options where they wish to make changes to their employees’ contracts. In an ideal world, the employer will be able to reach agreement (through a consultation process) with its employees.
Where things do not go according to the plan (which may often be the case) and agreement cannot be reached, employers can either: unilaterally impose the desired change; or terminate the employees’ existing contracts and offer re-employment on new terms. The latter practice is often referred to as “fire-and-rehire”, and although its use is not new, it has come into spotlight during the covid-19 pandemic, as more and more employers used it to implement changes to their employees terms and conditions of employment, either to allow the business to access the furlough scheme or to simply enable its survival thorough economically unparalleled times.
The Government has expressed particular interest in this area and in October 2020, officials at the Department for Business, Energy and Industrial Strategy (BEIS) invited the Advisory, Conciliation and Arbitration Service (in short, Acas) to carry out an independent fact-finding exercise into fire-and-rehire practices, in order to assist its policy thinking on this issue.
Acas gathered the views and experiences of a number of participants (such as employer bodies and trade unions) and published its findings in a (very detailed) report on 8 June 2021, which can be accessed via the following link. An eager observer will note that whilst the paper explores various topics of interest to BEIS such as history, use, current legal framework and suggestions for reform (some of which are summaries below), it lacks a clear conclusion or recommendation.
- There participants reported having used fire and rehire practices in many circumstances, such as redundancy situations, harmonising terms and conditions, introducing permanent or temporary contractual flexibility and interrupting continuity of service.
- Fire-and-rehire practices are not without risk and may expose employers to various employment tribunal claims such as wrongful dismissal, breach of contract, constructive dismissal and unfair dismissal claims, just to name a few.
- There was no consensus between participants over whether measures were needed to address fire and rehire, or what interventions may be most appropriate.
- Particular concern was expressed about employers using the practice to break continuity of employment.
- Suggestions by participants for legislative and non-legislative reform included: enhancing the unfair dismissal regime, protecting continuity of employment in fire and rehire scenarios and naming and shaming employers by publishing fire and rehire data.
- Concerns were expressed that if fire-and-rehire were not available as an option, more businesses may need to make redundancies, or, if redundancy is not appropriate, this could lead to business failure and insolvency.
After considering the content of the report, the Government commented that it does not accept fire-and-rehire as a negotiating tactic and considered that employers must exhaust every avenue towards reaching agreement where it is necessary to change terms and conditions of employment. The Government also acknowledged that reform might result in unintentional detrimental consequences and that consequently, it has no intention to introduce "heavy-handed legislation" to prevent fire and rehire. Instead, it has asked Acas to produce better, more comprehensive, clearer guidance to help employers explore all options before considering fire and rehire, and to encourage good employment practice.
In the absence of any relevant legislation or any clear timescales for the development and delivery of the new Acas guidelines, one must wonder whether the Government’s comments regarding negotiating tactics and last resort will influence the employers’ established fire-and-rehire practices? The answer is probably not. Consequently, it is possible that further reform may still be on its way.
Get in touch
If you have any queries relating to this article, or require any advice on issues you may be facing in the employment sector, please contact Andra Stanton.