Following several high-profile organisations using the “fire and rehire” approach to try to change their employees’ terms of employment, Kate Hindmarch, employment lawyer at Langleys Solicitors, advises whether the tactic is lawful, and the options employees have if they are faced with a new contract on worse terms.

“Under current law, if an employer wishes to vary terms and conditions of a current employment contact, they must firstly seek to reach agreement to the changes by consulting with the workforce, and any trade unions as appropriate.

“If an agreement cannot be reached, employers must terminate employees existing contracts by giving notice, and offer to re-engage on the new terms – “fire and rehire”. The employees are then effectively dismissed, and face the choice of accepting the new, usually less generous terms.

“Most employees in this situation, particularly in the current economic climate, are likely to accept the new contract, whatever the terms, to avoid unemployment. However, if an employee refuses the new terms, then they may have a claim for unfair dismissal, providing they have more than two years of service.

“Employers must be mindful that firing and rehiring can be damaging for employee relations in the long term, particularly if the situation is managed insensitively. Employer’s risk alienating their entire workforce; recent media commentary reports that employees being asked to accept a new contract on worse terms are even threatening employers with company strikes.

“Ultimately, “fire and rehire” is potentially lawful, but businesses must consider whether it is ethical. It is a high-risk strategy which employers should not take on without understanding the risks and potential reputational damage involved.”