Acas has just published advice aimed at dissuading employers from ”firing and rehiring” employees, with their Chief Executive, Susan Clews, stating:
“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.”
The publication of this advice follows a report which was commissioned by the Department for Business, Energy and Industrial Strategy (BEIS) earlier this year in response to the increased use of “fire and rehire” practices as a mechanism for reducing redundancies in the face of the business challenges presented by COVID-19. Some also believed that the pandemic was being used as a ‘smokescreen’ behind which workers’ terms and conditions were being generally diminished by this practice.
Put simply, where an employer has a sound business rationale for applying changes to terms and conditions of employment and where negotiations with affected employees to vary those terms are unsuccessful, it is open to an employer to go down the “fire and rehire” route.
In such circumstances, it is first necessary to first check the number of affected employees in order to determine whether compliance with collective consultation procedures is required. This is because the definition of “redundancy” under the Trade Union and Labour Relations (Consolidation) Act 1992 (i.e. the legislation which governs the duty to consult collectively) refers to ‘dismissal for any reason not related to the individual’. This includes the situation where an employer proposes to dismiss and offer re-engagement to employees who don’t agree to a proposed change to their terms and conditions. As a minimum, where an employer is proposing to dismiss 20-99 employees within a period of 90 days or less, collective consultation would need to begin at least 30 days before the first dismissal takes effect, and at least 45 days before the first dismissal if the proposed number of dismissals is 100 or more.
In terms of process once all and any consultation requirements have been fulfilled, the employer should write to affected employees inviting them to attend a meeting and setting out the proposed contractual changes. At the meeting, the suggested changes should be discussed, together with the legitimate business reason(s) behind them and the timing of likely implementation. The employees would then have the opportunity to express their opinion about the proposed changes, together with any concerns or objections, and to ask any questions. After the meeting, serious consideration should be granted to their views, whether any changes could be made to the proposal to accommodate them and whether assistance to mitigate any detrimental effects that the changes may have on the employees could be provided.
The employer should then write to the employees and give them the option of a further meeting. Alternatively, if they’re happy to accept the proposed changes, a letter or document (in duplicate) signed on behalf of the Company should be issued, confirming the permanent change to terms and conditions and when it will commence. The employees would be asked to sign, date and return a copy of this letter, retaining another for their own records. If a further meeting is necessary and acceptance of the proposed changes can still not be obtained, the employer can then either look to:
- refrain from proceeding with them;
- modify the proposal to take into account the views expressed by the employees, and seek their thoughts on the modified proposal; or
- terminate the employees’ contracts with notice on the correct grounds – this could be redundancy (where the reason for the proposed contractual changes is because the number or types of roles needed to do certain work have changed, or they’ll significantly change the roles of affected employees) or some other substantial reason (where the reason for the proposed contractual changes is because the business is in serious financial difficulty, all attempts to agree the changes have failed and it’s a last resort) – following a fair dismissal procedure and re-engage them on the new terms and conditions with continuous service.
Chris Nagel, EML’s Director and Head of HR, comments:
“To summarise, employers are free to renegotiate contractual terms at any point during the employment relationship. This is a relatively risk-free process if negotiations are entered into with a view to obtaining consent. Risk only tends to arise where there’s an intention to unilaterally vary contracts, or force changes through via termination and the offer of fresh contracts incorporating the revised terms. In such circumstances, there is exposure to claims for breach of contract and unfair dismissal (subject to the individuals concerned having the necessary qualifying service. There may also be scope for discrimination claims if the group of employees affected by the proposed change(s) possess protected characteristics around which they can base claims of detrimental / less favourable treatment.”
Over the course of the last 35 years, we have helped employers defend in excess of 3,000 tribunal claims. We are not a huge law firm with fees to match, nor are we a solicitor’s practice that prefers to keep clients at arm’s length. We are a long-established consultancy that provides tailored support on HR and Employment Law issues to organisations of all sizes and from all sectors.
If you are an employer and are contemplating introducing contentious changes to the terms and conditions of your employees, please do not hesitate to contact us on 01942 727200 and speak to one of our HR consultants for an initial consultation without charge or obligation.