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In June this year Acas published evidence on the use of fire and rehire practices at work. The report was commissioned by the Department for Business, Energy and Industrial Strategy. Views were sought from a range of professional bodies, including trade unions and employer organisations regarding the approach to changing terms and conditions often used as a means of saving costs.

The conclusion reached was that the practice of firing and rehiring has been used for many years as a means of avoiding redundancies and can have a detrimental effect on staff morale and turnover, business reputation and overall performance, quite apart from the potential costs involved in the event of claims by staff.

It is of course essential that staff agree to any such changes or you will be vulnerable to claims for breach of contract or unlawful deduction from wages. Those employees with a year’s service would also be able to resign and claim constructive dismissal.

Consequently, in response to the report, the government asked Acas to produce guidance to help employers explore the other options available to them before considering a fire and rehire approach in order to change employee contracts.

The main advice from Acas is to consider all other options before making changes to terms and conditions of employment by involving staff in genuine and meaningful consultation about any proposed changes.

Of course, changing terms and conditions is just one way to seek to make savings in a business and certainly the COVID-19 pandemic has put many businesses under pressure to find ways to reduce their overheads.  For some employers, this has meant redundancies and for others, adopting alternative ways to make the necessary cost savings whilst trying to maintain their existing staff in whom they have invested time and resources.


If as a business you find that you need to look at ways to cuts your costs, the following ideas may be worth exploring.


  • Promote flexible working opportunities to staff, which could include working from home, job sharing or varying or reducing hours of work. Flexible working has of course become even more commonplace since the pandemic forced many to work from home and a significant number of employers have continued to maintain a flexible or remote working policy. Remember that any variation must be agreed and recorded in writing. Furthermore, requests for flexible working must also be considered carefully to ensure compliance with the Flexible Working Regulations where the statutory regime is invoked and in order to avoid complaints of indirect discrimination.


  • Review your employee benefits. It may be that by shopping around or engaging the services of a broker you can find alternative providers for your employee benefits, such as medical insurance and life assurance, which will save you costs.


  • Consider introducing a sabbatical policy for staff, allowing a period of unpaid leave. This should be subject to management’s final agreement based on operational requirements and employees taking sabbatical leave should be informed that no guarantees can be given regarding their role on their return. However, do also remember that during this period of leave employees will still have continuity of employment and advice should always be sought before a returning employee is dismissed. Again, the arrangement should be recorded in writing to avoid any uncertainty.


  • Look at offering staff the opportunity to buy extra annual leave and therefore sacrifice their salary on a pro rata basis. Again, this may only be possible on a temporary basis and any arrangement needs to be clearly documented with all staff concerned.


If none of these options create the savings you need to achieve, you may need to resort to redundancies or considering outsourcing some functions or roles. In either case, taking appropriate professional advice at an early stage will always prove a good investment.

Please get in touch if you would like to discuss any questions you may have about right to work checks: 

E: / T: +44 (0)1252 821792

HR, Employment Law and Immigration Solicitors

+44 (0)1252 821792