Save, make, understand money

Household Bills

Clamp down on unscrupulous ‘fire and rehire’ tactics

Emma Lunn
Written By:
Emma Lunn

The move from the government comes as P&O refuses to reinstate sacked workers, saying doing so would cause the firm to collapse.

Ministers plan to introduce a statutory code to prevent unscrupulous employers using fire and rehire tactics.

Fire and rehire refers to when an employer sacks employees and then attempts to rehire them, or new workers to do the same job, on less-favourable terms.

P&O Ferries fired 800 UK workers two weeks ago and replaced them with foreign agency staff being paid as little as £1.80 an hour.

Other firms who have used fire and rehire in the past year or so include Weetabix, British Gas, Goodlord, Go North West, Brush Electronics, SAICA, Tesco and Jacobs Douwe Egberts.

Labour markets minister Paul Scully says a new statutory code on fire and rehire will also clamp down on controversial tactics used by unscrupulous employers who fail to engage in meaningful consultations with employees.

The government says using fire and rehire as a negotiating tactic is completely unacceptable, and it expects companies to treat their employees fairly. It described P&O’s actions as “disgraceful”.

But despite saying its against fire and rehire, the Conservatives have failed to bring in legislation to ban it completely. Tory MPs abstained on a Labour party motion to bring a complete ban on fire and rehire last week, which passed in the Commons by 211 votes. But employment law is unlikely to change without government support.

The new Statutory Code of Practice will detail how businesses must hold “fair, transparent and meaningful consultations” on proposed changes to employment terms.

This is what P&O Ferries failed to do – its chief executive Peter Hebblethwaite admitted to MPs last week that the company chose not to consult workers or unions about its plans.

The code will also include practical steps that employers should follow. A court or employment tribunal will take the code into account when considering relevant cases, including unfair dismissal. The courts will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.

The government says the code will act as a deterrent, particularly to those employers seeking to use the threat of fire and rehire as a negotiation tactic.

Scully said: “P&O Ferries’ actions were not a case of fire and rehire – just fire. However, the way the company acted in not consulting employees before taking extreme measures was appalling. This has laid bare the measures some deceitful employers are prepared to take to exploit and break the law.

“That is why we are producing a new code to tighten the screw on unscrupulous employers, who must comply with a new statutory code on tougher employment rules – including fire and rehire.

“We expect companies to treat their employees fairly – and whilst the vast majority comply with the law – today we are going further to stand up for workers against those that flagrantly disregard it.”

Fire and rehire tactics are often used when employers want to change the terms and conditions of their workers. This can take place when a company is in financial distress and needs to cut costs to stay in business.

Union GMB says the new statutory code “looks like futile tinkering”. Gary Smith, GMB general secretary, said: “Fire and rehire is a cruel, outdated, Dickensian working practice that should be consigned to the scrapheap of history.

“GMB’s members in Valeo, York, face the cruel injustice of fire and rehire right now. We have campaigned for it to be made illegal for years; politicians of all stripes agree with us, as do three quarters of the public – even the prime minister has condemned it.

“While we will look at the detail when it comes, our members are firm that a slap on the wrist won’t be enough. But this looks like futile tinkering and the scourge of fire and rehire must be barred from the start.

“We urgently need clear legislation to outlaw this abhorrent tactic which, unless checked, will continue to wreck lives across the UK.”