New Fire and Re-hire Legislation
Often viewed as a controversial approach, fire and re-hire is when an employer wants to change the terms and conditions of employees’ contracts of employment.
The new law and a new statutory code of practice will come into force on 18 July 2024.
It will still be lawful to fire and re-hire, provided a fair procedure is carried out, in line with the new statutory code of practice.
What is fire and re-hire?
Often viewed as a controversial approach, fire and re-hire is when an employer wants to change the terms and conditions of employees’ contracts of employment. It involves the employer giving notice to the employee to terminate their existing employment contract and offering them re-employment on new terms. A re-hire should not reset the employment start date and employment will be continuous, as there generally isn’t a break in service.
Why is fire and re-hire viewed as controversial?
This approach is often used by businesses who want to re-hire on worse deals, often when they are losing money and need to cut costs to stay in business. If employers fail to negotiate with employees, then they sometimes fire the affected employees and offer to re-hire them back on the same day – under reduced terms and conditions. It’s not illegal but is only considered acceptable as a last resort! Recent cases which hit the news, include P&O, BA, British Gas and Tesco.
What is the new code?
The new code focusses on meaningful consultation with employees which avoids the unreasonable early “threat” of dismissal if they do not agree to the change. Employers should not raise the prospect of dismissal where it is not envisaged.
Will the code change under Labour?
Rachel Reeves, Chancellor of the Exchequer, has previously said that Labour will end fire and re-hire practices, but when a company is facing bankruptcy and there is no alternative, they will have to consult with their staff and trade unions in those very limited circumstances.
Spectra’s opinion based on our years of experience, is that fire and re-hire is a rare occurrence and not a decision taken lightly by employers. We have supported many clients, particularly through Covid and lockdown to successfully consult with employees and agree a variation of terms without the need to fire and re-hire.
If you require further advice on fire and re-hire, support with consultation meetings or would like to discuss the upcoming changes in employment law being proposed under the new Labour Government, please contact us.