In June 2021, Acas published a report on the use of "fire and rehire" practices by employers seeking to force contractual changes on their employees. In response, the government confirmed that it did not intend to legislate to prevent fire and rehire and it recently blocked a proposed Bill which was put forward in this respect. Instead, it asked Acas to produce clearer guidance to help employers explore alternative options when considering making contractual changes. 

 

On 11 November 2021, Acas published updated advice to employers on changing employment contracts. Acas advises that "fire and rehire"  (which in legal terms is a dismissal for Some Other Substantial Reason followed by an offer of re-engagement on different terms) is an extreme step that can damage staff morale, trust, productivity and working relations. Tensions can arise if employees feel that they have not had the opportunity to inform decisions around proposals or do not support the changes. If changes are not managed well, employers may lose valued staff or find it difficult to attract new employees due to ensuing reputational damage. There is also the risk of legal claims or industrial action where there is a recognised trade union.

 

Acas advises that employers should fully consult with the workforce and make every effort to reach agreement on any contract changes. Effective consultation helps build trust as it allows staff to understand the reasons behind the proposed changes and give their views. 

 

If both sides are struggling to reach an agreement, the Acas advice includes tips on how to:

 

 - Keep discussions constructive.
 - Explore alternative options to reach a compromise.
 - Stay focused on trying to reach consensus.

One could argue that very little, if anything, has changed.  The legal use of the "fire and rehire" strategy remains lawful (to the disappointment of many), and whilst this latest Acas guidance should be considered carefully before dismissing an employee and offering re-engagement,  for such a dismissal to have been lawful before this guidance,  much of what is contained would have been necessary considerations in any event.