Employers often wish to change employees’ terms and conditions. This can be for any number of reasons but common reasons can include a desire to change working hours or pay rates or scales.
A common issue that arises for employers is that employees’ will often decide not to agree to the proposed changes.
Fire & Re-Hire
One option has recently been given the name “fire and re-hire”. This is not a new approach but is the new name that has been given to the scenario where an employer issues an employee notice of termination on their existing terms of employment and, at the same time, offers the employee re-engagement on new terms.
There are inherent risks to the so-called “hire and re-hire” approach with the obvious one being that the employee may reject the offer of re-engagement and walk away from the employer. The other risk is that, regardless of whether the employee accepts or rejects the offer of re-engagement, they will have been dismissed from their previous contract of employment and, subject to having sufficient qualifying service, may elect to present a claim for unfair dismissal.
Employers reluctant to “fire and re-hire” sometimes decide to simply impose the new terms on the basis that this is perceived to be a safer approach. The recent decision of the Employment Appeal Tribunal (“EAT”) in Jackson v The University Hospitals of North Midlands NHS Trust highlights why this view is misguided. The EAT explained the options available to an employee in this scenario (where an employer has imposed new terms on an employee) are:
- Resign and claim constructive dismissal;
- Waive any breach of contract and agree to work under the imposed terms;
- Refuse to work under the new terms and dare the employer to dismiss them;
- “Stand and sue” by working under protest but pursue a claim for breach of contract and/or any shortfall in wages; or
- Work under the new contract but assert dismissal from the old contract.
When considering whether to simply impose new terms and conditions, employers should bear in mind that of the employee’s five options, only option 2 provides the employer with the outcome they truly desire. The other four options lead to uncertainty and, in many cases, litigation.
The Best Way to Change Terms of Employment
In summary, the best way to effect changes to terms of employment is undoubtedly by agreement with the employee.
However, if that is not possible, serious consideration should be given as to how to proceed. “Fire and re-hire”, whilst currently unfashionable, may actually be a safer route for employers to pursue than simply imposing the change on an employee.
It will be easier to assess in advance of any “fire and re-hire” dismissals the likelihood that they will be deemed unfair or not. This can be contrasted with diving into the pool of uncertainty that can be created by simply imposing changes on employees.
Posted on July 28, 2023