When it comes to running a business there are often ups and downs; one of the more significant negatives can be sizing down on staff. Of course, sometimes there are inescapable reasons for firing an employee that would not be up for debate, such as stealing from the company, behaving in an aggressive way to co-workers or refusing outright to work.


The challenge and controversy can arise when the employers have something in mind in regards to how they want the business to run, or how they want particular employees to work, which can eventually lead to employees being fired and new people hired to replace them. However, often there may be ways to avoid sacking people and still be able to achieve the changes those at the top of the business are aiming for. This is what ACAS hopes their new guidance can help with.


What is fire and rehire?


Just to remove any doubt, the process of fire and rehire involves an employer firing or threatening to fire a worker if they do not agree to new terms within the company. It is not a one size fits all situation, and each case is different, but in many cases the changes are negative to the worker. For example, it could be a decrease in pay, reduction of allocated holiday time or removal of sick pay.


It can also be used for instances when staff are removed and then made to reapply for new roles within the same company.


What does Acas say?


Acas Chief Executive, Susan Clews, has said:


“Our new advice is clear that fire and rehire is an extreme step that can seriously damage working relations and has significant legal risks for organisations.

“Employers should thoroughly explore all other options first and make every effort to reach agreement with staff on any contract changes.

“Organisations that consult with their workforce in a genuine and meaningful way about proposed changes can help prevent conflict at work and stay within the law.”


Risks of hiring and firing


The Acas report goes on to list reasons why going down the route of firing and rehiring can often backfire on the employers themselves, and create a myriad of other issues. For example, their ex-employees may take legal action against them if they feel strongly enough, remaining staff may lose trust and begin to look elsewhere, and the firm may fall victim to reputational damage which is likely to make attracting new workers difficult.



Acas recommendations


In their guidance, Acas make a number of recommendations to employers who are thinking of making changes to employment contacts. Some of which may be helpful and can at least provide other options instead of moving straight to the fire and rehire stage.


What to consider first


As an employer, before you propose an employment contract change, you should consider:


  • what issue you are trying to solve


  • if a contract change is definitely needed to solve it


It is always worth looking at the problem from multiple angles to see if there are other ways of solving it.


Examples of when employers may need to consider employment contract changes include:


  • to make sure contracts are up to date with new laws or regulations


  • to better reflect someone’s job role, if it has changed


  • to introduce new terms and conditions, for example contractual redundancy pay or enhanced maternity, paternity, parental or adoption leave and pay


  • to reflect changes to an organisation, for example if it is considering moving to a different location or changing who people report to


  • helping an organisation better adapt to changing customer needs


  • economic reasons, for example if an organisation is considering a restructure or other changes to stay competitive in a changing market


Proposing the contract changes


Employers must inform all affected employees and workers and any relevant employee representatives, communication is absolutely key.


Employers must inform them about:


  • what the proposed changes are


  • who might be affected


  • why the changes may be needed


  • the timeframe for the proposed changes


  • any other options that have been considered


It is also important to take note of anyone who is absent when this information is communicated, or anyone who needs the information given to them in a different language for example. You cannot leave anyone out.


Providing clear information as early as possible helps:


  • give enough time for everyone to consider the proposed changes and how they wish to respond


  • explain what other options have been considered and why they are not considered appropriate


  • build trust by giving employees a say and assuring them you want to hear their concerns and suggestions


  • everyone work together to find solutions if there’s any disagreement about the proposed changes


Where contracts cannot be agreed to


This is the tricky part, and most likely the part of the guidance that will be of most use to employers. It is worth saying that while it may seem impossible at times to successfully negotiate, it is always worth trying to the very end, as it can make things much easier going forwards.


To stay focused on keeping discussions constructive, it can help to:


  • share any more relevant information – being transparent about your reasons can help others understand them better and make discussions more effective


  • continue to ask questions and listen to answers – taking time to understand other people’s views can help you find common ground


  • be prepared to consider changes to your original proposal – encourage alternative solutions and be open-minded to them


  • try to agree one change at a time – it can help to break down complex problems into smaller ones, for example start with ‘what’ might need to change, then move on to ‘how’ and ‘when’


  • recognise that differences of opinion are normal and to be expected – considering different views can lead to new possibilities to explore


  • try to find a solution that includes something for everyone – do not assume that someone must win and someone must lose



Dismissing and rehiring


If worst comes to worst, and the only way forward is to submit to the dismissal process, Acas has some advice on how to make it go as smooth as possible.


It is important to consider that by ending the employee’s original contract of employment you will be dismissing them. So you must:


  • have a fair reason for dismissal


  • follow a fair dismissal process


  • provide the correct amount of notice


  • offer the employee the right of appeal against their dismissal


If you dismiss and offer to rehire someone and it is not a redundancy situation, you will need to show you had ‘some other substantial reason’ to dismiss if it is challenged at an employment tribunal.


For example, it might be considered ‘some other substantial reason’ if:


  • your business is in severe financial distress


  • you have made exhaustive attempts to reach agreement on contract changes


  • there was genuinely no other option but to dismiss and offer to rehire


Possible employment tribunals


An employment tribunal will consider factors such as:


  • if you had a good business reason for introducing the change


  • if you reasonably and genuinely consulted with employees, including making any compromises where appropriate


  • if the changes you made were reasonable, for example if changes did not unfairly affect the financial wellbeing of employees


  • the extent to which you considered alternatives to dismissal


  • if any recognised trade union recommended or objected to the proposed terms


  • how many employees accepted the change and how many rejected it


  • if it was reasonable for an employee to refuse the change in the circumstances


Our thoughts


As a business ourselves, we are well aware that changes can occur as firms grow, people develop new skills and employees start moving up and down the ladder. It is the nature of working life. However, it is important to accommodate changes in the correct way, and to be open and supportive of your workers.


As you can see from the above points, it can be easy to fall into bad habits which can lead to disruption in the workplace. It is so important that colleagues are treated with the respect they deserve. Even if the only option is to get rid of old staff and bring in new people, the proper processes have to be followed if an employment tribunal is to be avoided. More often than not, however, we believe that such problems can often be solved internally with the right motivation and communication from employers who use best practice.



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