Fire and rehire: Navigating the new landscape

The practice of 'fire and rehire' has come under intense scrutiny since the COVID-19 pandemic, having seen many employers resort to this strategy to manage the challenges brought about by the crisis. To protect employees against unfair dismissals, a code of practice was introduced in July 2024, which has been strengthened through the Employment Rights Bill. 

Employers looking to change contractual terms can do so through mutual agreement with their employees. However, if employees don't agree to the new terms, employers have the option to terminate existing employment contracts and re-engage the employees under new terms. This process, often called 'fire and rehire', must be handled carefully to ensure compliance with legal and ethical standards. 

Here are the key factors schools and trusts should consider before resorting to fire and rehire practices.  

1. Sound business reason

Employers must have legitimate and justifiable business reasons for changing an employee's terms of employment. This reason should be clearly communicated to employees to foster understanding and cooperation.

2. Fair procedure

Schools and trusts must follow a fair and transparent procedure. Employers should behave reasonably throughout the process, ensuring that employees are treated fairly.

3. Exploring alternatives

Employers should explore all possible alternatives before resorting to fire and rehire practices. This might include negotiating with employees, offering voluntary redundancies, or considering other cost-saving measures.

4. Communication

Clear and open communication with employees is essential. Employers should keep any affected staff informed at each stage of the process, explaining the reasons for the changes and how they will be implemented.

5. Consultation

Engaging in meaningful consultation with employees and their representatives is a key requirement. This helps to address concerns, gather feedback, and potentially reach a mutually acceptable solution.

The risks of fire and rehire

While the Employment Rights Bill makes it automatically unfair to dismiss employees who refuse to vary their contract, an outright ban on this practice hasn't yet been introduced. Therefore, schools and trusts should consider the risks of carrying out fire and rehire practices from both a legal and reputational perspective.  

Unfair dismissal claims

Any dismissal, even if followed by re-engagement, carries the risk of unfair dismissal claims. Employers must ensure that their actions are legally defensible.

Industrial relations

The practice can damage industrial relations, leading to possible strike action or other forms of collective resistance from employees.

Reputational damage

Fire and rehire is a complex and sensitive process that requires careful handling. Employers must navigate this landscape with a focus on fairness, transparency, and respect for their employees. By adhering to the new code of practice and the provisions of the Employment Bill, employers can mitigate risks and maintain positive industrial relations while achieving necessary business changes.

If you're looking for support in conducting fair consultations on organisational change or would like advice on a specific employment issue, please talk to us.