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Miller Samuel Hill Brown Solicitors Blog

From time to time we will post news articles and announcements relating to the firm and to various legal issues that may be of interest to you.

Fire and Re-Hire or “Dismissal and Re-Engagement”

Fire and re hire or dismissal and re engagement

In March 2022, P&O Ferries faced significant public backlash and outcry following their decision to dismiss 800 members of staff while failing to follow a proper redundancy process.  The decision was met with fairly universal disdain given the way in which it was handled.  The scandal faced much criticism from the British Government as well as many of those in the legal profession.

Now, in November 2023, we were met with news reports that P&O Cruises planned to potentially fire and rehire 900 of their UK-based crew unless they accepted salary cuts and increased flexibility around their work, despite facing heavy criticism for this proposal.  The company have now hit back at these allegations and has said that “We are categorically not making any redundancies and we will not dismiss and re-engage staff. In fact we have significantly increased our headcount across our fleet.”

It is worth noting that despite the similar names, P&O Ferries (who engaged in unlawful redundancies last year) and P&O Cruises are separate firms.

Unlike their similarly named counterpart, Carnival UK (the operating company for P&O Cruises and Cunard) is reported to have embarked on consultations with staff representatives although (as reported in the Guardian) these are stated to only have commenced on 14th November.

The “fire and hire” process, is something which has come under significant criticism over the years.  Presently, the Tesco case concerning fire and re-hire is still in dispute, with permission having been granted to USDAW to pursue an appeal in the Supreme Court at the turn of the year. 

What is fire and re-hire though?  Fire and re-hire or “dismissal and re-engagement” involves a situation whereby an employer seeks to make a change to an employee’s working conditions contained within their contract. 

There are a number of ways these types of changes can be made, typically employers will consult with staff in order to reach an agreement to vary their terms and conditions.  This can sometimes involve a degree of negotiations, however, generally a resolution can be reached between parties. 

Where an agreement cannot be reached and the parties are in stalemate, the employer can take the decision to adopt this fairly nuclear tactic and effectively force through a change – dismissing the employee but then immediately, offering them their job back with the change of terms and conditions. 

While this practice draws the ire of many and will almost always come with negative consequences in terms of employee morale etc. it is not completely unlawful.  If the employer can show, essentially, that they have a legitimate business reason for making the change then a careful balancing act will have to be performed to determine whether or not the change is proportionate in terms of its impact on the individual employee(s).  That being said, in cases involving reductions to an employee’s pay, there are very few examples of case law where such a dismissal has been lawful.

As above, P&O Cruises have now said that they do not intend to dismiss and re-engage their staff, however, this does make you question what their intention is if they do not reach agreement on the proposals which allegedly include a reduction in pay for their staff.  Ultimately, if an employee does not agree to a change then the company could find itself in a stalemate.  If an agreed change cannot be negotiated then the only ways of forcing the change would either be to unilaterally impose the change (a breach of the employment contract) or dismiss and re-engage.

An employee who is dismissed and re-engaged has the option to pursue their employer for an unfair dismissal claim although, the issue that employees can often come across in this regard is that they have a duty to mitigate their loss and find alternative work.  Where they have been offered re-engagement in their previous role (albeit with the proposed changes) if they choose not to accept this they would need to give a compelling reason for doing so or this may be considered a failure to mitigate their loss heavily reducing any award an Employment Tribunal could make in their favour.

In January of this year the UK Government said it was “taking strong action” against what it called, “unscrupulous employers.”  In doing so, they developed a draft statutory Code of Practice on dismissal and re-engagement details of which can be found here.  Consultation on the draft code ended on 19th April 2023 and the draft code has not yet been implemented, however, what is proposed includes a 25% uplift to any Tribunal awards where an employer is found to have unreasonably failed to comply with the code.

We understand that businesses may face difficult decisions at times, and we are here to help you explore alternative approaches before considering dismissal and re-engagement. Our Employment team is dedicated to working closely with you to gain a thorough understanding of your business and its unique needs.  We strive to provide tailored solutions that work and truly make a difference for you, your employees, and ultimately your business. Our goal is to become the firm that you trust to make your world better. We invite you to contact us at 0141 221 1919 for a confidential and obligation-free discussion.

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