Firing and rehiring, also known as dismissal and re-engagement, is when an employer dismisses an employee and subsequently offers to rehire the employee on varied terms.

Employers may adopt this approach to enforce a change of terms and conditions where they have been unable to agree the proposed change with the employee. Although the practice itself is lawful, because it involves a dismissal there is invariably a higher degree of risk involved.

Unions have previously advocated to outlaw this practice and following its increased use in response to the coronavirus pandemic, the practice has been receiving more scrutiny.

ACAS was asked by the Government to gather evidence and report on the use of fire and re-hire. The report was submitted to government ministers on February 17, 2021, and the response is still awaited.

How does this affect employers?

ACAS guidance emphasises that employers should only adopt this approach when necessary and if all other attempts to agree varied terms have been exhausted. When moving to terminate and re-engage, employers should ensure they have followed a fair dismissal procedure - including:

Ensuring there are sound business reasons for the change

Engaging with affected employees

Considering alternatives prior to deciding to dismiss

Offering a right of appeal

This practice may also trigger collective consultation obligations where it is possible that more than 20 employees may be dismissed.

The Government response to ACAS’s report is awaited but in the meantime, employers should be mindful that this area is under heightened scrutiny at present.