Written by Rebeca Moss
12 Dec 2024
An end to ‘fire and rehire’: What employers need to know
Eden Scott is a team of recruitment professionals. While the information provided here is accurate to the best of our knowledge, it is intended for general guidance only. To ensure compliance with current and upcoming legislation, employers can consult with an HR or employment law specialist.
As part of the Employment Rights Act, the UK government is closing loopholes that previously allowed for ‘fire and rehire’ and ‘fire and replace’ practices.
The bill provides new safeguards for employees around contract negotiations, and intends to protect workers from abrupt changes to their contracts. As an employer, here’s what you need to know.
In order to make changes to workers’ contracts, workers would need to agree to the changes, unless the employer can prove that financial difficulties would make the change of contract terms ‘unavoidable’.
With the onus on the employer to prove unavoidable financial difficulties, the legal risk of dismissing employees in ‘fire and rehire’ and ‘fire and replace’ conditions significantly increases.
Additionally, employers will be required to enter into a period of collective consultation and notifications in cases where they are looking to make 20 or more redundancies across any of the business’s establishments (e.g. a branch, a premises). Previously, the redundancies needed to be within a singular establishment.
Adjust employment terms and conditions
When making new hires, consider conditions that are likely to be viable for the long term. This may reduce the need to enter into contract negotiation in the future.
Strengthen internal communication channels
Open communication with employees is more important than ever. Gather employee feedback and focus on creating a positive workplace culture. Fostering trust increases the likelihood that if changes to contracts need to be negotiated, there will be good will among employees.
Seek compromise
To remain compliant with legislation, where contract negotiations are necessary, aim to seek compromise with employees.
2 Workplace discrimination: Equality Act 2024 updates
3 Employment Rights Act 2024-25: How HR teams should prepare
4 Zero hours contracts UK: What employers need to know
As part of the Employment Rights Act, the UK government is closing loopholes that previously allowed for ‘fire and rehire’ and ‘fire and replace’ practices.
The bill provides new safeguards for employees around contract negotiations, and intends to protect workers from abrupt changes to their contracts. As an employer, here’s what you need to know.
What is fire and rehire?
‘Fire and rehire’ is the practice of firing employees who do not agree to changes to their contract, before rehiring them under the new terms.What is fire and replace?
‘Fire and replace’ is the practice of firing employees who do not agree to changes to their contract, before replacing them with new employees under the new terms.What changes are coming?
Effectively, the government is introducing a ban on ‘fire and rehire’ and ‘fire and replace’ by automatically treating these practices as unfair dismissal, meaning workers would be entitled to compensation.In order to make changes to workers’ contracts, workers would need to agree to the changes, unless the employer can prove that financial difficulties would make the change of contract terms ‘unavoidable’.
With the onus on the employer to prove unavoidable financial difficulties, the legal risk of dismissing employees in ‘fire and rehire’ and ‘fire and replace’ conditions significantly increases.
Additionally, employers will be required to enter into a period of collective consultation and notifications in cases where they are looking to make 20 or more redundancies across any of the business’s establishments (e.g. a branch, a premises). Previously, the redundancies needed to be within a singular establishment.
When will the changes come into effect?
The law is unlikely to come into effect until autumn 2026 (Littler).
How can employers prepare?
Employers and HR teams can get ready for the changes to ‘fire and rehire’ and ‘fire and replace’ practices in the following ways:Adjust employment terms and conditions
When making new hires, consider conditions that are likely to be viable for the long term. This may reduce the need to enter into contract negotiation in the future.
Strengthen internal communication channels
Open communication with employees is more important than ever. Gather employee feedback and focus on creating a positive workplace culture. Fostering trust increases the likelihood that if changes to contracts need to be negotiated, there will be good will among employees.
Seek compromise
To remain compliant with legislation, where contract negotiations are necessary, aim to seek compromise with employees.
Further reading
1 GUIDE: Unfair dismissal - How to protect your business2 Workplace discrimination: Equality Act 2024 updates
3 Employment Rights Act 2024-25: How HR teams should prepare
4 Zero hours contracts UK: What employers need to know
