Mishandled “fire and re-hire schemes” risk costing more than they save

Kate Jones, an associate at mfg Solicitors, has alerted bosses to be careful of the heavily-criticised move which has seen bosses attempt to change the terms of employee contracts, particularly when struggling to cover the heavy losses suffered during the Covid pandemic.

‘Fire and rehire’ is nothing new but has drawn attention from the media and Government to criticise those employers who are trying to change employment contracts to replace them with diminished terms. However, if handled correctly it can assist employers in avoiding redundancies by varying terms and conditions. Examples of changes include trying to make sure all employees are on similar terms,  removing bonus schemes or adding flexibility.

Mrs Jones, who advises employers and employees across the West Midlands said: “There are very strict rules governing terms and conditions and they must not be changed lightly by employers. At the very least, any employer thinking of changing their workers’ employment contracts needs to seek advice and ensure that it is handled fairly for everyone concerned.

“Many businesses will begin to consider their options now that the furlough scheme has come to an end. This means there may well be redundancies looming unless businesses can recover enough to cope without that support.

“Also, the way many businesses work may have changed with the growth of home working and they may wish to amend their contracts to reflect these changes.

“But what businesses cannot do, which some have already done, is just impose a change on employees. There has to be meaningful consultation and the situation must be handled carefully and consistently across the business.

“Fire and rehire should be a last resort if consultation has failed. Although it isn’t illegal, it is vital that the correct procedure is followed. If not, it could be more costly, both financially and reputationally than leaving things as they are.”