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Contractors at highest risk for “fire and rehire tactics.” Time to make it illegal?

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The Prime Minister’s reluctant acceptance of fire and rehire could give hiring companies carte blanche to use the ‘cruel’ tactic, the GMB Union has reported.

Responding to a question in Parliament on fire and rehire, PM Boris Johnson said “hire and fire should only be used in limited circumstances such as to prevent job losses…when all other options have been exhausted”.

The practice of fire and rehire (also called dismissal and re-engagement) occurs when an employer dismisses an employee and offers to rehire them on new terms.

“The new terms are usually more favourable toward the employer,” said a House of Commons Library report.

The practice is not unlawful in and of itself. Yet. However, as it does involves dismissal, the employer might face claims for unfair dismissal.

For example, if there are sufficient numbers of employees involved, the employer will also have a legal duty to undertake collective redundancy consultations first, according to the House of Commons Library.

When does fire and rehire most likely happen?

Firing and rehiring could happen at any time, but it often occurs when an employer wants to change an employee’s terms and conditions of employment, but the employee does not agree.

Changes could include cuts to pay and benefits, a reduction in working hours, changes to the place of work or the introduction of restrictive covenants, according to Barry Stanton, partner and head of employment at Boyes Turner.

According to Stanton, the practice is also used in redundancy situations, so that an employer can put all employees at risk and make them apply for the remaining jobs. “This can give the employer more latitude in deciding who to rehire, as opposed to following a traditional redundancy selection exercise,” he said in a People Management report.

Who is most at risk for fire and rehire policies?

If you have a short notice period – for example, the statutory minimum of one week you could be more at risk than others.

Often those with fewer than two years’ service and workers, such as contractors, rather than employees can be at the highest risk for fire and hire tactics. This is according to Trevor Bettany, head of employment, pensions and immigration at Charles Russell Speechlys, who was also quoted in the People Management news report.

Could fire and rehire become illegal?

Gavin Newlands, MP, has submitted Private Members Bills with the aim of reforming the law to make it illegal to fire someone where the purpose of their termination is to rehire them on less favourable terms, according to a report by Boyes Turner.

“Although the progress of the Private Members Bills has seemingly stalled, the Government has indicated that it does plan to legislate around the practice of firing and rehiring,” according to employment solicitor Natalie Wood and Director Emma O’Connor who wrote the report.

In February of last year, the government commissioned the Advisory, Conciliation and Arbitration Service (Acas) to conduct a review of the tactic, a report which Acas published this month.  

Wood and O’Connor’s report assessed the Acas report: “The report does not offer much additional direction at this stage, instead pointing at suggested legislative options (e.g. tightening up the law around unfair dismissal and protecting continuity of employment in fire and rehire scenario) and suggested non-legislative options (e.g. publishing ‘name and shame’ data on employers that fire and rehire) that were put forward by participants of Acas’ fact finding exercise. The CIPD has also indicated that is willing to explore the use of fire and rehire as a means of amending terms of employment. Suffice to say, it is likely that we will see further developments in this area.” 

To read the Acas’ report on fire and rehire practices click here.

GMB calls for levelling up worker rights

“Thousands of workers across the UK – and their families – have had their lives ruined by fire and rehire bullying,” said Gary Smith, GMB General Secretary.

“But the UK Government clearly supports the continued use of fire and rehire, there’s no levelling-up for workers’ rights here.

“This is a pivotal moment for our covid recovery in terms of how we value our workers going forward. Outlawing fire and rehire would be a good start.”

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