Fire and Rehire
If your employer wants to make changes to the terms and conditions of your contract, they may have several options. Ideally, your employer will want to make changes with your agreement, but if you do not agree, your employer may unilaterally impose the change or terminate your existing contract and offer re-employment on new terms – commonly referred to as ‘fire and rehire’
Why might my employer want to change my contract?
There are many circumstances in which employers use fire and rehire, for example:
- redundancy situations (to minimise job losses)
- to harmonise terms and conditions
- to introduce permanent or temporary contract flexibility
- to interrupt continuity of service or to address changing customer or operational needs.
The practice of firing and rehiring is not new but has become the focus of attention during the COVID-19 pandemic. Use of the practice may increase as the furlough scheme and other support measures are wound down.
Not all employers will resort to firing and rehiring. It may be possible for employers to collaborate with their workforce to find suitable adaptations.
In what other ways can my contract be varied?
A contract can be varied in a number of ways. Whatever method is used, your employer should consult with you and explain the reasons for the proposed change.
Variation by Agreement
The best way of making changes is with your agreement or, possibly, with that of your trade union (collective agreement). It is preferable for any changes to be recorded in writing which will help to reduce any dispute later as to what was agreed.
It is a legal requirement that any variation to the contract must be supported by consideration (i.e. monetary or other benefit). If the proposed variation is to your advantage then that will be the consideration (e.g. a bonus or extra holiday). Consideration may be harder to establish when the proposed variation is to your disadvantage.
If you continue to work without objecting to the variation you may be deemed to have consented to that variation (known as implied agreement).
Variation permitted by the contract
The terms of your contract may authorise a variation. There may be a specific flexibility clause giving an express right for your employer to make the proposed change (such as a mobility clause). Or there may be a general flexibility clause giving your employer a general right to vary the terms of the contract. However a non-specific, widely-drafted flexibility clause may be of limited use and effective only to bring about minor changes.
Even if the contract appears to allow your employer to make the proposed change your employer must still act reasonably.
Imposing change unilaterally
If the proposed change is not authorised by the contract itself and/or you refuse to agree to the variation your employer may try to impose the variation unilaterally. Your employer will be in breach of contract and you can respond as follows:
- Work under the new terms under protest;
- Refuse to work under the new terms if possible.
You may choose to work under the new terms but make it clear that you are not accepting the change. You may bring a claim for breach of contract or unlawful deductions from wages (if the breach of contract involves a shortfall in wages). Only direct financial loss arising from the breach can be recovered, so a breach of contract claim may be difficult unless the breach is connected with your pay or benefits.
Where the change imposed is substantial your employer may be deemed to have dismissed you and you may also bring a claim for unfair dismissal (depending on your length of service).
If the breach of contract is serious enough, you may resign and bring a claim for constructive dismissal rather than continue to work under the new terms and bring a claim for breach of contract or unlawful deduction from wages.
It will only be possible for you to stay in employment and refuse to work under the new term where the term affects your day to day working arrangements (such as job duties and working hours) as opposed to matters which are firmly in the employer’s control, such as pay.
If you refuse to work under the new terms but do not resign, your employer may be forced to dismiss you which could lead to an unfair dismissal claim (see below)
Dismissal and re-engagement on new terms (Fire and Rehire)
In the absence of contractual flexibility or your express agreement to the variation, your employer’s best option may be to dismiss you and offer to re-engage you on the new terms.
If your employer has given proper contractual notice of the dismissal (or made a payment in lieu of notice) then you will not have a wrongful dismissal claim.
Even where your employer offers continuing employment on new terms, termination of your existing contract constitutes a dismissal in law and you will be able to bring an unfair dismissal claim, even if you choose to accept the offer of new employment.
Your employer can however defend an unfair dismissal claim if it can establish a potentially fair reason for dismissal and show that it acted reasonably in dismissing you for failing to agree to the variation. Your employer will need to show that it had a sound business reason for dismissing you and that the dismissal was overall and procedurally fair.
If you are offered a new contract on reasonable terms and without significant changes you may not be awarded much, if anything, by way of compensation even if your unfair dismissal claim succeeds.
Lincs Law Employment Solicitors Can Help You
If you have an employment law issue please contact one of our specialist employment law solicitors at Lincs Law on 01522 440512 or visit our website at www.lincslaw.co.uk for more details on how we can help you.
Specialist Employment Law Solicitor
LincsLaw Employment Solicitors