Acas, the independent public body that provides advice to employers and employees on their employment rights, has published guidance to help employers avoid fire and rehire practices when looking to change employees’ contracts of employment, this month.
At one point in the employment relationship, it is highly likely that an employer will wish to change the terms of conditions on which a particular employee or group of employees are engaged. Examples where this might arise include annual pay increases, promotions, changes to the employee’s role, business reorganisation, a desire to harmonise disparity in terms and conditions which have arisen over time and the introduction of hybrid working arrangements.
A contract of employment can be amended at any time either in accordance with the terms of the contract itself or with the agreement of the parties to the contract, in this case the agreement of the employer and employee.
One example where it might be possible to change the contract is where there is a flexibility clause in an existing contract which gives the employer the power to vary some or all the terms without the employee’s consent. This might be a specific flexibility clause such as a mobility clause.
Where the proposed change is not already authorised by the terms of the contract, the express consent of the employee concerned will need to be obtained. Options might include:
Obtaining the express consent of the employee to the proposed change. Consent will need to be given freely and free from duress and be supported by consideration. The consent should ideally be in writing for evidential reasons.
Variation with union agreement
Changes not permitted by the contract but where the employee has impliedly agreed to the change, over time. If the employee continues to work on the terms of the new contract, without making it clear that they do not agree with the new terms and are working under protest, this could amount to implied agreement.
Imposing the change unilaterally by dismissing the employee and re-engaging them on new terms. This might mean:
Giving notice to the affected employees to terminate their existing contracts; and
At the same time, offer re-engagement immediately after the existing contracts expire, on the new terms. This is known as “dismissal and re-engagement” or “fire and re-hire”.
The Acas guidance issued this month is to help employers explore all other options first before considering fire and rehire to change employee contracts of employment.
Acas advice is that organisations that are considering contract changes should fully consult with all affected staff and their representatives in a genuine and meaningful way.
Effective consultation can help maintain good workplace relations as it allows staff to understand the reasons behind proposed changes and provides them with an opportunity to give their views. This can help to build trust and find a solution that works for everyone.
Tensions can arise if employees feel that they have not had the opportunity to inform decisions around proposals or do not support the changes. This can result in staff feeling less committed and can impact an organisation’s performance.
If you require any advice on the drafting of contracts of employment, making changes to contracts of employment or any other employment law or HR query, please contact Farleys employment law team on 0845 287 0939 or send your enquiry by email.
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