Fire and Rehire

Fire and rehire is a controversial practice used by employers to impose contract changes on unwilling employees. New legal requirements now regulate how this can be done.

What Is Fire and Rehire?

The Practice

When an employer wants to change contract terms but employees refuse:

1. Employer gives notice to terminate existing contracts
2. Offers re-engagement on new terms
3. Employees either accept new terms or lose their jobs

Also Known As

• Dismissal and re-engagement
• Contract termination and replacement
• Forced contract changes

Why Employers Use It

• To reduce costs
• To harmonise terms after merger
• To change working patterns
• To remove outdated terms
• When negotiation fails

The New Legal Framework

Statutory Code of Practice (2024)

The government introduced a statutory Code on dismissal and re-engagement requiring employers to:

• Consult meaningfully with employees/representatives
• Explore all alternatives before considering dismissal
• Use dismissal and re-engagement only as a last resort
• Follow fair procedures throughout

Consequences of Breaching Code

If employer unreasonably fails to follow the Code:

• Tribunal can increase compensation by up to 25%
• Applies to unfair dismissal claims
• Applies to other relevant claims

What Employers Must Do

Before Considering Fire and Rehire

Step	Requirement
Business case	Genuine need for change
Communication	Share information with employees
Consultation	Meaningful discussions
Alternatives	Explore other options first
Time	Allow adequate consultation period

Genuine Consultation

Employers must:

• Explain why changes are needed
• Share relevant information
• Listen to employee concerns
• Consider counter-proposals
• Not have predetermined outcome

Exploring Alternatives

Before dismissal, consider:

• Voluntary agreement
• Phased introduction
• Enhanced payments for acceptance
• Variations to proposals
• Different implementation

Last Resort

Dismissal should only happen when:

• Genuine business need exists
• Meaningful consultation occurred
• Alternatives fully explored
• Employees still refuse
• No other option available

Employee Rights

When Facing Fire and Rehire

You have the right to:

• Be consulted properly
• Receive full information about changes
• Have concerns listened to
• Time to consider proposals
• Be accompanied at meetings
• Refuse changes (but may be dismissed)

Options When Threatened

Option	Pros	Cons
Accept changes	Keep job	Worse terms
Accept under protest	May preserve claim	Uncertain position
Refuse changes	Maintain position	Risk dismissal
Negotiate	May get better outcome	May not succeed
Involve union	Collective strength	If not already involved

Accepting Under Protest

If you accept but disagree:

• Write stating you accept "under protest"
• Note you do not agree to the changes
• State you reserve your rights
• Keep copies of correspondence
• Seek advice on further action

Unfair Dismissal Claims

When Available

If dismissed for refusing new terms:

• Need 2 years' continuous service
• Claim within 3 months less 1 day
• ACAS early conciliation required

What Tribunal Considers

Was dismissal fair? Tribunal examines:

• Was there genuine business need?
• Was there proper consultation?
• Were alternatives considered?
• Was dismissal reasonable in circumstances?
• Did employer follow the Code?

Potentially Fair Reason

Dismissal for refusing new terms may be:

• "Some other substantial reason" (SOSR)
• But must still be reasonable
• Process must be fair

Code Uplift

If employer breached the Code:

• Compensation can increase by up to 25%
• Tribunal considers nature of breach
• Applies to basic and compensatory awards

Collective Redundancy Rules

When They Apply

If 20+ employees affected, employer must:

• Notify the Secretary of State
• Consult with employee representatives
• Follow collective consultation rules
• Start consultation at least 30-45 days before dismissals

Protective Award

Failure to consult collectively:

• Up to 90 days' pay per employee
• Significant financial exposure
• Applies even if employees re-engaged

Practical Guidance

For Employees

If you receive notice of change:

1. Don't panic - you have time
2. Read the proposals carefully
3. Attend consultation meetings
4. Ask questions and raise concerns
5. Consider your options
6. Get advice (union, legal, ACAS)
7. Document everything
8. Know your rights

If you're dismissed and offered re-engagement:

1. Consider whether to accept
2. Accept under protest if needed
3. Know the tribunal time limits
4. Seek advice quickly
5. Consider collective action with colleagues

Questions to Ask

• Why are these changes needed?
• What alternatives have you considered?
• What's the timeline?
• What happens if I refuse?
• Can terms be negotiated?

When Fire and Rehire May Be Fair

Factors Supporting Employer

• Genuine business need demonstrated
• Proper consultation conducted
• Alternatives fully explored
• Reasonable notice given
• Fair selection if not all affected
• Reasonable transition arrangements

Factors Against Employer

• No genuine business need
• Inadequate consultation
• Alternatives not explored
• Rushed process
• Discriminatory selection
• No mitigation offered
• Code not followed

Impact of Refusal

If You Refuse New Terms

Possible outcomes:

• Dismissal with notice
• Offered re-engagement on new terms
• May negotiate different outcome
• May bring unfair dismissal claim

Financial Considerations

If dismissed:

• Entitled to notice pay
• Entitled to any redundancy pay (if applicable)
• Holiday pay owed
• May get nothing extra if re-engaged

Future Employment

Consider:

• Will relationship be damaged?
• References going forward
• Career implications
• Financial needs

Challenging Fire and Rehire

At Tribunal

To succeed in unfair dismissal claim:

• Show dismissal wasn't reasonable
• Highlight Code breaches
• Evidence inadequate consultation
• Show alternatives existed
• Demonstrate process failures

Remedies

If successful:

• Basic award
• Compensatory award
• Up to 25% uplift for Code breach
• Reinstatement possible (rare)

Collective Action

Stronger together:

• Union involvement
• Collective grievance
• Media attention
• Political pressure
• May improve negotiating position

Tips for Employees

Do

• Engage with consultation
• Put concerns in writing
• Keep records of everything
• Seek advice early
• Know your time limits
• Consider collective action

Don't

• Ignore communications
• Accept immediately without thought
• Assume dismissal won't happen
• Miss tribunal deadlines
• Go it alone if union available