Acas has published guidance to help employers explore alternative options for introducing changes to staff contracts before considering ‘firing and rehiring’ employees.
The conciliation body said 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.
Its guidance urges employers to enter into constructive discussions about any changes they propose before forcing employees to sign new contracts.
It also offers advice around what to do if an organisation is unable to reach a consensus with employees or trade union representatives, and shares how Acas can help resolve disagreements and provide support.
“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,” said Acas chief executive Susan Clews.
“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.”
The guidance warns that tensions arise when employees feel they have not had an opportunity to inform decisions, which can lead to staff disengagement, retention issues, reputational damage and can affect an organisation’s performance.
It reminds employers that staff may bring a legal claim if they feel contractual changes have led to them being unfairly dismissed or discriminated against.
In June Acas published the results of a fact-finding exercise into the use of “fire and rehire” – where organisations dismiss staff and then reemploy them on, usually, less favourable terms.
It found that some organisations felt fire and rehire was reasonable when used as a last resort – for example, where the alternative option was business insolvency – while others suggested the practice is rarely, if ever, justifiable and should be prohibited.
A private members’ bill, put forward by Labour MP Barry Gardiner, proposed legislation to discourage fire and rehire tactics, failed to get support in the House of Commons last month after Conservative MPs were urged not to back it.