Fire and rehire proposals in the Employment Rights Bill are being amended by ministers to offer employers slightly more leeway.
In what is considered an 11th-hour intervention – the Bill is now at report stage in the House of Lords – the government has added nuance to its original proposals which sweepingly did away with the practice of fire and rehire.
Originally, the Bill made it automatically unfair to dismiss an employee for refusing any variation to their contract of employment, or to enable an employer to re-engage them (or another) under a varied contract for substantially the same role.
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Under the new amendment, this will only apply if an employer seeks to make a “restricted variation”.
This is defined as any change to an employee’s contract that reduces pay, alters performance-based pay measures, affects pensions, changes working hours or shifts, or reduces time off. It will also cover the inclusion of variation clauses that allow such changes without the employee’s consent (although it appears existing clauses are unlikely to be affected).
Amy Wren, senior counsel at Farrer & Co wrote that the revised approach appeared to concentrate the strictest safeguards on contractual changes that were most susceptible to misuse, and were most likely to impact vulnerable workers. This shift was expected to have a considerable impact on employers wishing to implement such changes.
Under the changes, expected to become law because the amendment comes from the government itself, dismissal will not be automatically unfair if the proposed contractual variation is not “restricted”. This includes changes such as to an employee’s place of work or duties. Employment lawyer Darren Newman wrote that this meant dismissal for refusing to agree to a new location would not be automatically unfair, which it had been as the legislation previously stood.
Public sector change
One of the changes being made to the fire and rehire provisions relates specifically to public sector organisations. Currently, said Newman, the only exception to the rule that dismissal for refusing to agree to a restricted variation is automatically unfair was that the employer was facing ‘financial difficulties’ that affected its ability to carry on its business.
It has been pointed out since the Bill was published that this effectively excludes public sector bodies such as local authorities. They may face financial difficulties – but these do not lead to them going out of business and shutting down. Under the amendments the exception will apply where financial difficulties “affect the financial sustainability of carrying out the employer’s statutory functions”.
Luke Bowery, partner in the employment team at UK law firm Burges Salmon, said the amendments “temper the impact for employers of the original provisions. Although the proposed amendments to the Bill will still provide employees with very significant protection from this practice, the ability for employees to veto all contractual changes has been curbed.”
He added: “The best way for employer and employee to address the need for contractual change is to seek agreement through consultation. Where that isn’t possible, the government’s proposed amendments still see employees offered very significant levels of protection from fire and rehire where employers are seeking to change core elements of the contract of employment including pay, pensions, hours of work and time off. A tightened regime will also apply in relation to other types of change.”
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