Where an employer needs to make contractual changes to an employee’s terms and conditions this should always be approached through consultation and agreement with the employee(s) involved.
In exceptional circumstances, where there are genuine and pressing business needs and agreement cannot be reached, employers can sometimes be justified in unilaterally changing workers’ terms and conditions by terminating their contracts and re-hiring them on new terms and conditions.
The CIPD’s view is that such “fire and rehire” practices should only ever be considered as an absolute last resort if changes to employment contracts are critical and voluntary agreement is not possible.
“Fire and rehire” – also known as “dismissal and re-engagement” is not a new practice. It is legally allowed in the UK, but does carry serious risk of costly claims and wider commercial repercussions if not managed or implemented correctly. Following questionable practice by some employers, the UK Government announced in 2022 that a new statutory code would be introduced to “detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms”. The code will outline the practical steps that employers should follow if the decision is made to carry out dismissal and re-engagement. The code will also be used by a court or employment tribunal when considering relevant cases, including unfair dismissal. We will update this guide when the statutory code becomes available.
Employers must recognise that this approach creates a high risk of legal claims, reputational damage and an adverse effect on employee relations. It should only be undertaken after extensive consultation and consideration of all other alternatives.
In this guide, we look at the laws around “firing and rehiring” and, more importantly, ways to find a different solution.
Varying the terms and conditions of employment
Good practice dos and don’ts – changing terms and conditions
“Fire and rehire”
Importance of considerate and empathetic management
Case study example
Please note: While every care has been taken in compiling this content, CIPD cannot be held responsible for any errors or omissions. These notes are not intended to be a substitute for specific legal advice.
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