Fire and Rehire – What’s changing?

What is fire-and-rehire? – When an employer wants to change the terms of an employee’s contract and the employer, their trade union or their representative will not accept the changes and no agreement can be reached, an employer may dismiss the employee and immediately offer them a ‘new’ role under worse terms and conditions.

When does fire-and-rehire occur? – Each case of fire-and-rehire is different, however some of the most common reasons an employer may use fire-and-rehire is to reduce pay or holiday allowance as well as changing shift patters or break allowances.

What’s changing? – Labour pledged that they would ban fire-and-rehire in their 2024 election manifesto and have drafted a new statutory Code of Practice which came into force in July. This new code sets out that re-engagement of employees on new contractual terms should not be used by employers as a chance to break employees’ period of continuous employment, which aims to prevent employers using fire-and-rehire to prevent employees gaining more employment rights which typically commence two years post starting employment.  However, this new code does not prevent the use of fire-and-rehire and merely states that it should only be used as a last resort.

The new code does allow for employees to claim additional compensation in an unfair dismissal claim when employers are found to have unreasonably failed to comply with the code. The tribunal can increase any compensation up to 25%.

Guidance for Employers

Guidance for Employers – The new statutory code of practice, provides a guide for employers when they aim to make a change to one or more of their employee’s employment contracts. The new code does not prevent employers from using fire-and-rehire in order to change the terms of an employee’s contract, however it sets out key guidance on how an employer must approach this. The code specifies that meaningful consultation should be undertaken prior to using fire-and-rehire to alter the terms of an employee’s contract and that the negative impacts of dismissing the employee must be taken into account before proceeding. Employers are instructed to give as much notice as possible to an employee, following either the contractual notice period or the statutory notice period, whichever is greater and employers should also consider what, if any, practical support could be offered to the employee before the dismissal such as career guidance or relocation assistance.

It should be noted that whilst the new code does not prohibit fire-and-rehire it sets out that it should not be used as a negotiation tactic or to break an employee’s period of continuous employment. 

At Bangor University Legal Advice Clinic (BULAC) we can help with employment disputes such as claims of  unfair dismissal arising from a fire-and-rehire situation. If you would like an appointment please call 01248 388411 or email bulac@bangor.ac.uk