New guidance: Acas publishes guidance on how to avoid firing and rehiring to vary employees’ terms of employment

Where employers wish to change one or more employees’ terms of employment and employee consent is required, but not forthcoming, a practice has developed of firing those employees and then offering to rehire them on the changed terms. Recently, however, this has become increasingly contentious. It certainly carries a legal risk of breach of contract and unfair dismissal claims (and sometimes PR risks too) if it is not carried out correctly.

Acas has therefore issued guidance ‘Making changes to employment contracts – employer responsibilities‘ to help employers avoid having to fire and rehire, except as a last resort.

Although it is not legally binding, useful key points in the guidance include that:

• Employers should inform and consult with employees (or their representatives) to explain proposed changes to terms of employment, the timeframe, and what is likely to happen if the new terms are not accepted, with a view to getting agreement to the proposals or reaching a compromise.
• Where a union is involved the employer should offer collective conciliation through Acas, and should not offer the new terms direct to employees until the agreed collective bargaining procedure has run its course.
• Employers should avoid making threats, particularly at the outset, and should treat firing and rehiring as their last resort.
• Employers should ensure managers and employee negotiators receive appropriate training.
• Employers should keep alternatives to fire and rehire on the table for as long as reasonably possible.

The guidance also stresses the importance of documenting any agreement reached – particularly where it triggers a requirement to update the ‘employment particulars’ employers are legally obliged to provide to staff.

Operative date

• Now

Recommendation

• Employers should check out the ACAS guidance on the Acas website and, if they wish to change employees’ terms of employment, seriously consider taking specialist legal advice on how to achieve this in their particular circumstances without firing and rehiring.