What are your rights around dismissal and ‘fire and rehire’ tactics?

If you are dismissed by your employer, you must be given at least the notice stated in your contract or the statutory minimum notice period, whichever is longer, or they could otherwise face a claim for wrongful dismissal or breach of contract. When you are dismissed, your employer must not have chosen you for a discriminatory reason and if you have been employed for more than two years there must be a justified reason and reasonable grounds and procedures followed.

In order to amend an employee’s employment contract an employer needs consent. To amend the contract to the disadvantage of the employee without consent is a unilateral variation which could result in a claim for unfair dismissal
or a contract breach. Some employers try to circumvent these basic requirements. It has been reported that some have implemented ‘fire and rehire’ tactics throughout the pandemic. According to research conducted by the TUC, one in 10 workers have been forced to reapply for their jobs on worse terms. This controversial practice has faced considerable resistance from workers and unions alike.

Individuals at the greatest risk of the firing and rehiring approach are those with short notice periods – for example, the statutory minimum of one week – and those with less than two years employment.

But in these times of economic uncertainty, caused by lockdown measures and ongoing restrictions, many employers across various sectors have had no choice but to try and renegotiate their employment contracts. But is ‘fire and rehire’ ever necessary, and is it legal?

When can an employer legally fire and rehire?

There are limited circumstances under which an employment contract can be unilaterally changed. ACAS guidance provides that it may be possible in the following scenarios:

• Where there is a flexibility clause – allowing employers the right to make reasonable changes;
• Where the employee agrees to the change after a period of consultation free from duress; or
• Where employee representatives – for example, a trade union – agree to the change on their behalf.

If an employer wants to propose changes to your employment contract, this would usually be achieved through consultation. If an agreement over contractual changes cannot be reached, firing and rehiring is a way an employer can force a new contract on employees, but this could lead to legal action, particularly as terminating an employee’s contract and offering them a new one on reduced pay or benefits could leave employers open to tribunal claims.

However, for an unfair dismissal claim to have legs you need to have been employed for two years or more so newer staff are at greater risk unless they are willing to fund and risk costs in the county court for a breach of contract claim.

Dialogue and consultation are invariably the best approaches as employees will then recognise that many employers have to take drastic steps to enable businesses to survive and often compromise and work with them. An employer who explains what it is having to do and why, and that there are no reasonable alternatives, may be able to obtain consent. Failure to do so can lead to legal recourse and, ultimately, costs and reputational damage.

If your employer has not taken any of these steps, you may be entitled to issue a claim to the employment tribunal. It is therefore important that you take advice as soon as possible, and take steps to issue your claim within the statutory limitation period of three months less one day following dismissal.

*Karen Holden is founder of A City Law Firm.

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