James Tamm believes that following the end of Furlough in September, there may be an expected increase in dismissal and engagement contracts.
It seemed to be an optimistic outlook for the labour market when government indicated that 1.3 million fewer workers moved off furlough in March and April alone. The governments’ Plan for Jobs has taken an incremental approach as they prepare the economy to wean from furlough which is expected to end in September this year. In July the government plans to implement a 10% contribution from employers towards the cost of paying for unworked hours. The aim over time is to support the growth of economic opportunities and help industries to resume business.
With that being said, there will be many businesses that may still find it difficult retain their staff on their current hours, pay or packages. James Tamm predicts that if government does not intercede with additional financial interventions for employers that ‘firing and rehiring’ will become widespread.
It was reported in a TUC poll that at the beginning of the pandemic 1 in 10 workers were asked to reapply for their jobs under worse terms and conditions. Among these businesses were British Gas who fired almost 500 engineers when they refused to sign new contracts which entailed working more hours at a reduced pay. British Airways also received a backlash from unions when they offered their workers inferior terms of contracts.
James Tamm shares that, “with three quarters of the UK public against this approach, unions calling for a ban, and a number of associated legal risks, businesses considering this strategy should proceed with caution.”
Dismissal and reengagement (hire and fire) should be an absolute last resort. There are 3 other ways in which an employer can change a contract and should be explored first.
These 3 steps include:
1. In accordance with the terms;
2. By obtaining the employee’s agreement;
3. Unilateral variation
If these options have been exhausted and the worker is facing the prospect of being permanently dismissed then the option of ‘dismissal and reengagement’ can be considered. A concern and risk with this lies with the dismissal of the employee that could potentially open doors for unfair dismissal claims. In addition, time also needs to be factored in. Dismissal notice for employees can take up to 12 weeks depending on their length of service or contractual terms. Also, if there are 20 or more dismissals, collective consultation is required and could further delay the process. As evidently seen with the pandemic, time is in short supply.
With polling suggesting the publics support for the legal ban of on the practice, it is unlikely that government will remove fire and rehire because in some instances, it is a legitimate last resort for some employers.
Fortunately, The Department for Business, Energy & Industrial Strategy (BEIS) intends to establish a new Workers’ Watchdog enforcement body to protect the rights of UK workers against modern slavery, working below minimum wage and more. Also identified as a Single Enforcement Body (SEB), the new Workers’ Watchdog which will ensure businesses who do not comply will be held accountable.