‘Fire and rehire’: is it legal?
The term ‘fire and rehire’ was frequently used during the Covid-19 pandemic as organisations tried to change their employees’ contracts and terms of employment after experiencing a fall in income and the safety net of furlough came to an end. However, although it was added to the pandemic dictionary alongside new buzzwords, ‘furlough’ and ‘social distancing’, ‘fire and rehire’ is not a new tactic.
What is fire and rehire?
Also known as ‘dismissal and re-engagement’, ‘fire and rehire’ is where an employer fires workers and rehires them under different terms of employment, which are more favourable to the employer. For example, altered salaries or different benefits.
Is fire and rehire legal?
Terminating an employee’s employment and then rehiring them under different terms is not strictly unlawful, as long as it is done properly, i.e. with legal contracts reviewed and signed.
However, employers are likely to face employment tribunal claims from unhappy employees who face significant changes to their pay, benefits or hours and subsequently, their lifestyle.
ACAS has issued guidance on employment contract changes and what employees can do if these changes are not agreed upon.
The guidance recommends that employers should consider whether the changes are really necessary and, if they are, to take the following steps:
- Attempt to reach an agreement with their worker – this may take time and employers should make that time to do so.
- Consider the damage to workplace morale and the risk of legal proceedings against them.
- Follow fair dismissal procedures and give the lawful amount of notice to employees.
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