Fire and rehire – Commons Bill blocked

Posted on November 25th, 2021

Earlier in the year we reported on an Acas report that had been commissioned by the Department for Business, Energy and Industrial Strategy (BEIS) to investigate the practice of ‘fire and rehire’. The practice has seen a particular upsurge during the pandemic. A link to that article can be found here.

What is fire and rehire?

Fire and rehire, also known as dismissal and re-engagement, is a practice used by employers to vary contractual terms of employment by terminating old contracts and immediately offering new terms to employees. This is usually following an attempt to vary terms and conditions of employment by agreement and through consultation.

While the practice is used in circumstances to try and stave off redundancies and to avoid businesses failing completely, the controversy of the practice is that it can be used by unscrupulous employers to force employees into worse terms with the threat of dismissal. Amongst other things, this can include worse holiday, hours, or payment terms with employees feeling coerced to accept the changes or face termination of their contract with the uncertainty that would bring.

The Commons Bill

Due to organisations such as British Gas and Compass Group using the practice during the pandemic despite achieving profits, and with wide scale reporting of union and employee concerns on the erosion of employment rights, Labour MP Barry Gardiner sought to introduce the Employment and Trade Union Rights (Dismissal and Re-engagement) Bill.

This bill was to provide better employment rights and protections to staff faced with the dilemma of having to accept worse terms to keep their jobs. In summary, the bill sought to make it illegal to simply force staff to accept worse terms where the variation is obtained through threat of dismissal.

The bill did not seek to make the practice itself illegal but sought to ensure that additional legal responsibilities were placed on employers to carry out information sharing and consultation with staff before dismissals.

Blocking the bill

On 22 October 2021, the government blocked the bill from passing the early commons stage. While the practice of forcing staff into worse terms with the threat of dismissal was largely condemned on all sides, the government did not see there was a need to legislate at this stage, with a preference for better Acas guidance to be provided to businesses on how to approach such situations. The Labour party and the unions have condemned the government’s decision to block the bill.

What next?

The practice of fire and rehire would not have stopped even if the bill made it all the way into primary legislation. Both sides recognised that the practice was sometimes required to save businesses and avoid redundancies. It is unclear what will happen next and whether any new Acas guidance will be provided and, if it does, when that will be.

What it means for schools and academies?

Schools and academies should always have sound business reasons for seeking to vary employment contracts. Meaningful consultation should always be conducted before any decisions are made to fire and rehire, which is often seen as a last resort option.

If you require any advice on changing employees’ terms and conditions or on a reorganisation/redundancy exercise then please contact the CEFM office and we will be happy to assist you.

We also provide  model policies and related forms and letters for schools, all supported by our help and advice line to answer any related questions.

Get a free trial of CEFMi – a comprehensive resource for school managers including templates, policies, and more.