Following the publication of its evidence on the use of fire and rehire practices at work, advice and conciliation provider ACAS was asked by Government to produce guidance to help employers explore all other options first before considering fire and rehire to change employee contracts.

This new advice has now been published and is designed to help employers maintain good employment relations and reach agreement with staff if they are thinking about making changes to their contracts.,

ACAS Chief Executive, Susan Clews said:

"Our new advice [makes it] clear that fire and rehire is an extreme step that can seriously damage working relations and has significant legal risks for organisations. Employers should thoroughly explore all other options first and make every effort to reach agreement with staff on any contract changes. Organisations that consult with their workforce in a genuine and meaningful way about proposed changes can help prevent conflict at work and stay within the law."

ACAS’s advice is that organisations that are considering contract changes should fully consult with all affected staff and their representatives in a genuine and meaningful way.

Effective consultation can help maintain good workplace relations as it allows staff to understand the reasons behind proposed changes and provides them with an opportunity to give their views. This can help to build trust and find a solution that works for everyone.

Tensions can arise if employees feel that they have not had the opportunity to inform decisions around proposals or do not support the changes. This can result in staff feeling less committed and can impact an organisation's performance.

If both sides are finding it difficult to reach an agreement then ACAS’s advice includes tips on how to:

• Keep discussions constructive;
• Explore alternative options to reach a compromise; and
• Stay focused on trying to reach consensus.

ACAS advises that the practice of fire and rehire is an extreme step that can damage staff morale, productivity, working relations and can also lead to industrial action. Other risks for employers in using fire and rehire practices can include:

• Making it harder for both sides to reach a negotiated solution if employees feel 'threatened' by an employer;
• Expensive legal claims from staff who feel that they have been unfairly dismissed or discriminated against;
• Reputational damage, which can make it difficult for an organisation to attract new employees;
• Immediate and long-lasting damage to trust with staff; and
• Losing valued people because they do not accept the offer of a new contract, or staff leaving later due to unhappiness over the change or the way it was made.

Read ACAS's advice for employers on making changes to employment contracts.