'Fire and rehire' used by one in 10 firms that changed staff contracts during Covid, research finds

CIPD warns nearly 43,000 employers could have dismissed workers and reemployed them as it launches new guidance on changing terms and conditions

More than one in 10 employers who made changes to their employees’ contracts during the coronavirus crisis did so using fire and rehire tactics, CIPD research has found.

A poll of 2,000 employers conducted by the HR body found 22 per cent of firms had made changes to their employees’ terms and conditions between March 2020, when the UK first went into a national lockdown, and July 2021.

While the majority of the firms that made changes did so through negotiation, consultation and voluntary agreement (86 per cent), 14 per cent did so through dismissing staff and rehiring them on new terms.

If extrapolated out to the wider UK business population, CIPD said this could mean the equivalent of 42,960 employers have used fire and rehire techniques since the start of the pandemic.

Ben Willmott, head of public policy at the CIPD, said that it was no surprise that so many companies made contractual changes given the mass shift to remote and hybrid working caused by the pandemic.

But, while fire and rehire was still “not a widespread tactic”, he said, “more progress can still be made in avoiding this practice, which creates a high risk of legal claims, reputational damage and an adverse effect on employee relations.

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“‘Fire and rehire’ should only be undertaken after extensive consultation and all other alternatives have been considered,” said Willmott.

In response to the findings, the CIPD has released new guidance for employers making changes to their terms and conditions, stressing that they should always consult and seek voluntary agreement with employees, and take all steps to avoid fire and rehire practices except in exceptional circumstances.

The CIPD research also found that nearly half (49 per cent) of firms that made contractual changes did so to the location of work, with similar numbers making changes to hours of work (47 per cent) and levels of pay (44 per cent).

Many firms also made changes to redundancy terms or pay (22 per cent) and access to enhanced contractual entitlements or incentives (20 per cent).

The research noted that not all the changes were negative, particularly when it came to pay. Of the firms that made changes to pay, half (50 per cent) improved it, while 38 per cent made reductions.

Similarly, more firms reduced working hours rather than increased them (44 and 24 per cent respectively).