Alternatives to fire and rehire

With fire and rehire being set in the crosshairs of the new Labour Government as part of their Employment Rights Bill, businesses will need to take heed to ensure they don’t end up on the wrong side of an employment tribunal. 

Whilst the ethical practices of fire and rehire has often come under scrutiny there will doubtlessly be cases where the model is used as a benefit to both parties and HR teams will need to find alternatives or run the risk of a legal claim for an employee being unfairly dismissed.

For more information on alternatives to fire and rehire as well as the Government’s Employment Rights Bill, Contact Croner today on 0808 501 6650.

What is fire and rehire?

When a business formally ends a contract of employment and extends another offer of employment to the same employee. This new contract typically comes with fewer benefits, potentially reduced hours and sometimes pay as well. 

This practice of dismissal and re-engagement is often used as an alternative to agreeing new contractual terms and conditions of employment with an employee.The practice has been frowned upon for some time as it can be used as a method of reducing employee rights without their consent. When used, fire and rehire forced the worker to either accept the terms offered or find new employment. 

When is fire and rehire justified?

Currently in the following instances the practice of an employee being dismissed and re-engaged are justified. This is only after extensive communication with the affected employee(s) which can include consultation, and reasonable attempts at compromise, have failed to yield a result. 

Company insolvency or potential insolvency

If a business is facing potential insolvency and costs are increased, although there is not a decline in workload and redundancy is not a viable option, then fire and rehire may be used. 

Need to reduce costs for business survival

This must be an urgent need to reduce salary and benefit expenditure to ensure the business survives. Other cost-cutting measures should already be being implemented in conjunction with this. 

Cost of redundancy pay would threaten more jobs

If contractual redundancy payouts would create a situation where more jobs would be threatened, then the practice of fire and rehire can be implemented to reduce the amount of pay to further protect more jobs. 

Where compromise has been agreed with the vast majority of employees

If new contractual terms have been agreed by the vast majority of your workforce but there are a small number of employees refusing to accept the changes, then employers can use fire and rehire. 

What are the proposed changes to fire and rehire?

Whilst the Labour Government have proposed an all out ban on fire and rehire, there may still be situations where it might be possible. In short companies may be able to use it in certain circumstances as a last resort.

There may be tougher criteria and stricter legal doctrine that employers will have to ensure they do not breach, or risk a claim for unfair dismissal being upheld by an employment tribunal. 

If the law does become an outright ban, then employers will be left with a few viable options to use instead of fire and rehire. Even in the case that fire and rehire tactics ultimately still end up legally sound but with much tighter restrictions, companies should still only consider the practice as an absolute last resort. 

Below are viable alternatives that employers should consider in the absence of (or before using) fire and rehire. 

Consulting with employees

Holding a collective consultation with your employees about their options is often the most amicable way to start proceedings. Come to the table and be prepared for compromise, perhaps like offering greater flexibility on working remotely as compensation for a reduction in company benefits. 

Including your employees in the discussion shows willingness and helps them understand things from the business’s perspective, which betters the chances of you coming to a mutually acceptable decision. 

Redundancy

Whilst businesses sometimes turn to fire and rehire as an alternative to redundancy, it can often be the case that considering one or two roles for redundancy is a better option than enforcing new contractual terms on your entire team. In some instances employees may willingly take redundancy 

New terms for new employees

This is when onboarding new staff, new employment contracts are issued with revised terms for new employees. Over time, as staff are replaced, the new changes become the norm. The only downside to this is that it could create a tiered system with older employees enjoying more benefits than new employees. 

Arranging voluntary cuts

Your business could enter negotiations with employees to see if any will voluntarily concede to reductions in salary etc. You should come to the discussion with as many viable options as possible, including fire and rehire. This way if an employee accepts the new terms they are doing it out of choice and not having the new terms imposed upon them.

Promotions

If an existing employee is being promoted then the new terms of their contract can be implemented as part of the agreement. 

Keep up to date with fire and rehire

With the Employment Rights Bill currently going through parliament, there are sure to be changes to standards and practices in employment law and HR. Ensuring that your documentation and contracts are up to date will be vital in reducing any vulnerabilities that could lead to an employment tribunal. 

Croner has been leading the way in everything from HR, Employment Law and Health and Safety for over 80 years, helping businesses like yours stay legally compliant with expert professional advice.

Call us today on 0808 501 6650.