‘Fire and rehire’ refers to when an employer dismisses an employee and rehires them on new terms.
Also known as dismissal and re-engagement, firing and rehiring is typically used by employers who wish to vary the terms of their employees’ contracts but could not do so by agreement because te new terms are typically less favourable for the individual than under their previous contract of employment.
Employers looking to retain as many employees as possible while reducing overheads may be considering altering their employees’ terms of employment to reduce costs, such as contractual entitlements or working hours. But where affected employees do not consent to the changes, this can create legal risk as well as morale and performance issues.
Notwithstanding the legal consequences of a ‘fire and rehire’ approach, employers have an ethical and moral judgment to make. Now more than ever, customers are averse to employers that are seen to put profit before people. This can really damage a business’s reputation from which they may struggle to recover, which in turn adds to costs pressures. Firing and rehiring is therefore typically seen as a last resort, not least because of the legal risk, as well as the reputational fall-out and the damage to employee morale and wellbeing, particularly if the process has been insensitively managed.
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