Published 18th September 2020
Can an employer change terms in an employee’s contract?
A ‘fire and rehire situation usually arises when an employer needs to make a change to contracts of employment. An employer can vary terms in employees’ contracts if;
- They have a clause in the contract that allows them to do so, e.g a flexibility clause or variation term
- If they seek the employee’s agreement
An employer can force employees to agree to a new contract, however, this should be the last resort and an employer should consider the risk of legal action if this is not done fairly or legally and if it is not done with reasonable notice.
Employees should check if there is a variation term in their contract if so, check the wording of the term to see what this allows the employer to specifically change, whether they need to provide you with notice and whether there is a certain process that needs to be followed for such change. Without such a clause, an employer will need to agree with the employee any changes before they are made. Even where there is a clause, it does not mean the employer can simply change this overnight without even notifying the employee, there should be a consultation and sufficient notice of the change.
Can an employer fire and rehire under new terms and engage them in a new contract?
If an agreement cannot be reached and the changes are absolutely necessary to be made, then the employer may end a contract and re-employ someone on new terms and conditions. This is legal for the employer to do as a last resort after making every effort to try and reach an agreement with the employee.
Should the employer proceed to firing and rehiring then they must do the following;
- fairly dismiss employees from the first contract. This means they must have a fair reason and follow a fair process, depending on what the reason for the dismissal is.
- provide the affected employees with enough notice e.g contractual or statutory notice (1 week for every week worked up to a maximum of 12 weeks)
- consider the legal risks of doing so as employees can potentially take a case to a tribunal and claim; breach of contract or unfair dismissal should the correct procedure not be followed.
- ensure there is a sufficient gap between the old and new role
If an employee feels as though they have been unfairly dismissed from their old contract, then they may have a claim for unfair dismissal.
NOTE – An employee must have 2 years continuous employment with that employer to be able to make a claim to the tribunal and they must bring a claim within 3 months for the termination date.
It is likely to be found that if the new contract starts immediately, or shortly after the old one ends that the employee will have preserved continuous employment.
It is important for an employer that if you are thinking of firing and rehiring someone or a number of employees to seek legal advice to ensure you are making the right decision and to reduce the risk of legal difficulties as the circumstances are very fact-specific and there may be another way to approach the situation.
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