Employment Law: Changing Employment Terms & Conditions | December 2021

Employment Law: Changing Employment Terms & Conditions | December 2021

During the Covid-19 pandemic, there has been an increase in the number of organisations/employers adopting a ‘Fire and Re-hire’ practice. This is when employees are dismissed and then re-engaged on less generous terms and conditions.

New guidance from ACAS highlights that ‘fire and rehire is an "extreme step" that can damage staff morale, productivity and working relations, and could also lead to industrial action and reputational damage’. So whilst not illegal, it can be a risky strategy for an employer to adopt when it comes to making changes to contracts of employment.

Due to the rise in this practice, representations were made in a private members bill to seek to amend the law relating to workplace information and consultation and to provide safeguards for workers against dismissal and re-engagement on inferior terms and conditions.

The government, whilst agreeing to the principals contained in the draft bill, opposed it and instead deferred this to ACAS to produce more comprehensive and clear guidance to help employers explore all of the options before considering 'fire and re-hire’. The following is a summary of that guidance:

  • Considering employment contract changes
    Discusses the legal status of the contract between employer and employee and the importance of seeking agreement to any changes
  • Proposing employment contract changes
    Requirement to inform employees (and representatives) on any proposed changes, any other potential options, timeline etc ;
  • Consulting about employment contract changes
    What is meant by consultation – dealing with questions/concerns and consider proposals that may be put forward;
  • Handling requests to change an employment contract
    Where an employee has a right to request flexible working, reduce their hours etc;
  • If employment contract changes are agreed:
    How to action these – put it in writing, ensure clarity what and when is going to happen;
  • If employment contract changes cannot be agreed:
    Benefits of seeking agreement, significant risks without agreement.

ACAS Chief Executive, Susan Clews, said:

"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."

NB: This information is for general guidance only and is not legal advice. It should not be regarded or relied upon as a complete or authoritative statement of the law. However, if you have any HR issues on this or any other HR matters and would like to talk them through with our team, please contact us.

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