Whatever the size and nature of your business, its people are your greatest asset. In order to retain staff and facilitate uninterrupted workflow, certain systems need to be in place that protect workers and encourage them to remain loyal to the company. A fire and rehire culture can very much go against this approach.
What is fire and rehire?
The fire and rehire process is when an employer threatens an employee with the loss of their job unless they sign up to new terms and conditions of employment. The reason for doing this could be any number of things, although common examples are when an employer wants to reduce an employee’s salary, annual leave entitlement or sick pay allowance. It could also be a case of the employee’s working arrangements being significantly changed to the extent that a new contract is required.
Why avoid fire and rehire?
Every employee wants to feel safe, secure and valued in their role, which a fire and rehire culture very much diminishes. Though the changing of a contract may be unavoidable, the way in which it is handled remains crucial. Being told that they will lose their job unless they agree to new terms that may not be in their best interests is very stressful for a worker, leading to low mood and lack of loyalty to the business.
Workplace expert Acas recently published guidance on fire and rehire practices, which aims to help employers explore all available options before resorting to such drastic action.
Maintaining working relationships
As Acas pointed out, the working relationship between an employee and their employer is of the utmost importance. When a worker feels that they are unimportant and expendable, they are likely to become disconnected from their role and their productivity will suffer as a result.
Confident and happy employees are a requisite for smooth day-to-day operations, a positive brand reputation and effective long-term recruitment, so the fire and rehire practice should be avoided whenever possible.
The legal risk of fire and rehire
Acas also reminded businesses that fire and rehire can come with legal risk, as employees may decide to pursue lengthy and potentially costly legal proceedings such as tribunals and compensation claims.
Avoiding fire and rehire
Due to fire and rehire being such an extreme step, Acas recommends that employers should instead strive to reach an agreement with their staff. By consulting its workforce and discussing the proposed changes, a business can prevent conflict and remain compliant with the law.
Well-planned, honest and receptive consultation not only informs workers of the planned changes but also gives them the opportunity to respond and share suggestions. This helps to maintain trust between an employee and their employer, which could lead to an outcome that is beneficial for both parties.
Consultation is a strong investment
In many cases of fire and rehire, employees will agree to the terms but immediately seek new employment, resulting in the business losing large volumes of staff in a short time. By avoiding a fire and rehire culture, your employees won’t feel threatened and helpless, plus your business can steer clear of reputational damage, reduced workflow, and legal claims from individuals who feel that they have been unfairly dismissed or discriminated against.
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