Firing and rehiring is the practice of making changes to employment terms by dismissing members of staff and re-engaging them on new terms. However, this approach can expose the employer to a risk of unfair dismissal claims.
The risk associated with this practice was demonstrated when the High Court subjected the supermarket giant Tesco to an injunction, preventing them from firing and rehiring staff based on the terms contained in their employment contracts.
However, the Court of Appeal has now reversed that decision.
This development will come as welcome news to business owners seeking to vary employment terms where the proposed changes cannot be agreed with staff members. But employers should proceed with caution, as the risk associated with this tactic will depend upon the terms of the employment contract, and can even representations made to the employees before the contracts were signed.
To achieve the best outcome, businesses should seek trusted legal advice before considering using fire and rehire methods.
Court of Appeal overturns injunction restraining employer’s ‘fire and rehire’ exercise The Court of Appeal has overturned an injunction preventing Tesco from “firing and rehiring” employees in order to remove their contractual entitlement to enhanced pay. Despite the facts of this case being unusual and extreme, the High Court had been wrong to conclude that Tesco could not adopt its proposed course of action.