On 11 November 2021, Acas published new advice with the goal of assisting employers in maintaining good employment relations and reaching agreement with their staff if they are thinking about altering their employment contracts.
The new advice published comes following Acas’ report on fire and rehire practices which was issued in June 2021. This seeks to alert employers to the legal risks that fire and rehire practices can have on their working relationships with their employees.
Employers are encouraged to consider any contract changes carefully, starting with ascertaining which issue they are trying to resolve and whether this could be achieved using alternative means.
Following this, employers should then carefully consult the guidance at each step of the process to ensure compliance. This will mean informing all affected employees, workers and any relevant employee representatives, providing relevant information about the changes and then consulting with the affected party in order to try and achieve a constructive solution.
Acas advice strongly encourages employers considering contract changes to consult with all affected employees and their representatives prior to making any such amendments. On the publication of the new advice, Acas Chief Executive, Susan Clews, stated “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.”
The new advice focusses heavily on the benefits that effective consultation can bring. The Acas advice states that this involves maintaining good workplace relations through open dialogue which allows differing views to be discussed and considered which, in turn, builds trust between employers and their employees.
Risks of Fire and Rehire Practices
The new advice seeks to mitigate the risks which the adoption of fire and rehire practices can bring, including:
- The risk of the employee bringing a legal claim against their employer if they feel they have been unfairly dismissed or discriminated against; and
- The risk of the employer facing reputational damage which can make it difficult to attract fresh talent in the long run; and
- The risk of (permanently) damaging trust and confidence with employees; and
- The risk of losing staff who chose not to accept new contract offers or who are unhappy with the various changes.
As part of the new advice published, Acas has provided tips to help mediate situations where the employer and employee are struggling to reach agreement on new proposals or contract changes. Some of these include keeping discussions constructive, considering evaluating alternative options in an attempt to compromise and staying focused on trying to achieve a practical consensus.
The advice states that situations can become more aggravated where employees do not feel that they have been provided with the chance to contribute to the new proposals and have their opinions considered. The result of this can lead to the employer’s organisation suffering from a performance perspective due to its workforce feeling de-motivated and less committed to the success of the organisation.
It is said that opening dialogue between both parties will leave less room for misinformation, miscommunication and will help to strengthen the employee/employer relationship in the long term.
What happens if agreement cannot be reached?
The guidance strongly encourages employers to make every attempt possible to try and reach agreement and provides several useful mechanisms which will aid employers in this regard. However, inevitably, in some instances it will not be possible to reach agreement which leaves employers with two options; giving notice to the employee that they intend to make the contract change on a certain date or giving notice to terminate the employee’s existing contract and rehire them on the new terms (i.e. “fire and rehire”). The guidance clearly states that these options should be avoided where possible though as each carries significant legal risks.
If any of these issues impact you or your business, or you have any questions, please get in touch with the authors below, or any member of the Employment Team.