Guidance from Acas warns employers that the practice of fire and rehire should only be used a last resort

Further to its’ report in June, Acas has published advice to employers, which strongly encourages them to consider the following when looking to make changes to contracts of employment:

• the necessity of amending contracts of employment in the given circumstances;
• consultation requirements;
• how to deal with changes to employment contracts where variations are agreed; and
• how to deal with changes to employment contracts where variations are not agreed.

In respect of the latter, there are two potential options available to an employer. The first is to impose a change to the employee’s terms of employment by giving notice to them that changes will be made to their contract of employment and will take effect from a certain date. The second is to adopt the fire and rehire approach.

Acas’ advice highlights the risks of making changes to contracts of employment in such ways, noting that it could result in: legal claims being brought against the employer (i.e. for breach of contract, claims for constructive unfair dismissal or unfair dismissal); damage to morale and good working relations within the workforce; strikes or industrial action; and reputational damage to the wider business.

Given the risks associated with changing contracts of employment without agreement, Acas cautions employers to exhaust all other avenues first before imposing a variation without the employee’s consent or dismissing and re-engaging them on alternative terms. In particular in relation to the practice of fire and rehire, Acas have warned that it is an extreme step and that it should be used as a last resort only, i.e. only once employers have made all reasonable attempts to reach agreement through a full and thorough consultation.

In situations where the employer has considered that it is necessary to amend contracts of employment and the proposed variations to employment contracts are not agreed, employers are therefore first advised to:

• remain focussed on keeping discussions with employees constructive, so that information can be shared with employees so they can better ask questions about and understand the proposed changes and air their concerns, which could enable both sides to reach a middle ground;
• consider how they can make proposed changes easier to agree, for example by offering a new and more beneficial term to compensate for a less attractive change; and
• consider engaging Acas, who may be able to help provide support with resolving disagreements.

For help and advice in updating or rolling out new contracts of employment, please contact our Employment Team on [email protected] or 01189527284.​