You will have seen the recent news about British Gas (and Clarks footwear in Somerset) and their proposals to fire and rehire employees who refuse to agree to new terms and conditions.
What is Fire and Rehire?
The term is misleading.
What it normally entails is an employer trying to persuade employees to agree to new (often worse) terms and conditions and terminating their employment if they refuse.
They will only be “rehired” if they agree to the new terms. If they don’t agree they will stay fired.
Is it always a “bad” thing?
No.
It can be “bad” if it is simply a way of driving down pay and benefits in order to increase profits.
However, it can often be an essential cost-cutting measure if a business is going through tough times.
Ok. If we do need to change terms and conditions, what is the right way to go about it?
We have 2 options:
Try to agree the change and, if employees won’t agree, impose the change unilaterally;
Try to agree the change and, if employees won’t agree, terminate their employment.
Three initial points to bear in mind.
Tactics
If we don’t want to follow into the British Gas/Clarks trap and lose control of the narrative, we have to make sure our verbal and written communications to staff are properly worded and that the people managing the exercise are good communicators and, ideally, well respected within the business.
TUPE
If we want to change terms and conditions after a TUPE transfer there are additional issues for us to consider.
Collective consultations
If we have to dismiss 20 or more people at one location because they refuse to agree to proposed changes we must follow a collective consultation process.
What next?
Look at the contract of employment.
Does it give us the right to make the changes?
Clauses that allow us to make changes fall into two categories:
General Flexibility Clauses
These clauses give us a general, quite vague, power to vary the terms of the contract.
This type of clause will only allow us to make minor changes unilaterally.
Specific Flexibility Clauses
These clauses give us a right to make specific changes.
For example, the right to change hours of work and to change pay commensurately.
What procedure should we follow if we have a Specific Flexibility Clause?
If we can rely on the clause because it is very specific we still need to follow a consultation process before we impose the change.
Why?
The implied term of mutual trust and confidence.
If we just impose the change, without consultation, that will be a breach of the term.
It could lead to the employee resigning and bringing a claim of constructive unfair dismissal.
If we can agree the change during consultations, write to employees to confirm the new arrangements.
If we can’t reach agreement and we have a specific clause in the contract and we are confident that the clause covers the change we want to make, we can write to impose the change unilaterally.
What procedure should we follow if we only have a General Flexibility Clause?
We go through the same consultation process as outlined above.
If we can’t reach agreement, we should invite them to a formal meeting to discuss our proposal and their refusal.
If they still refuse to agree to the changes, we will write to terminate their employment and give them the right to an appeal.
They may bring a claim of unfair dismissal.
We should be able to defeat such claims if we have followed a proper consultation and then termination process, and if we have sound reasons for needing to make the changes.
Practical tips for agreeing the change
It’s a selling exercise. Choose the right people to deal with it.
Incentives. Can we offer any? Anything at all we can offer will make our proposals more palatable.
Remember, the stronger the reasons for needing to make the changes, the more likely it is that people will agree.
Normally, people will be willing to agree changes, if the alternative is redundancy.
Give people time to get used to the idea. Don’t push it through too quickly.
Keep on top of the process. Don’t let it drift.
Plan it properly before you start including preparing letters and notes for meetings.
Action
If you need to make changes in your business, give us a call or send us an email, and we can have a (free, with no obligation) chat about your situation and how we can implement the changes with minimum drama and legal risk.
T – 01202 932944