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Businesses may have no choice but to use fire and rehire contracts

Businesses may have no choice but to use 'fire and rehire' contracts to secure their future.

Almost 500 British Gas engineers have lost their jobs after they refused to agree to new terms that would see them work more hours for less pay.   

British Gas are the latest company to introduce fire and rehire contracts, with British Airways also condemned by workers unions for ordering staff to accept what they labelled as inferior contracts.

Daniel Caie, former British Gas engineer, said he is disappointed the company attempted to place staff on inferior contracts.

Speaking to HR magazine he said: “Those who stood side by side should feel proud that they fought against the craven demands of an asset-stripping board of directors who refused to lift their heads out of the sand.

“British Gas must now wrestle with the horrendous publicity and drastic drop in manpower and experience that they've caused by their own doing.” 

At the beginning of the year (January 2021) the Trades Union Congress (TUC) warned fire and rehire tactics were becoming more widespread during the COVID-19 pandemic.

Martin Tiplady, CEO of Chameleon People Solutions, said he thinks it is inevitable other companies will follow suit.    

He told HR magazine: “After the pandemic, industries will have to strive to modernise their workforces and conditions of employment to reflect current requirements.

"If they do not, they risk being hidebound by expensive and sometimes unviable conditions written and introduced in a completely different working climate.”

Tiplady said employers will need to be sensitive on how they seek to make such changes to their organisations.

He said: “Trades unions will need to reflect whether simple resistance of such changes is always in the best and long-term interests of their membership.

“If they do not find middle ground, the future of many businesses will become ever more uncertain and even more serious implications will follow.”

A TUC poll found that since the first national lockdown in March 2020, nearly one in ten (9%) workers have been told to reapply for their jobs on worse terms and conditions, or else they’d be let go.

Kate Palmer, HR director at business services Peninsula, warned due to employers struggling financially, they may have no choice but to cost cut. 

She told HR magazine: “Reducing staff pay or hours, could be an option they may wish to explore. However, as seen with British Gas’ actions, this can be hugely unpopular with staff and lead to several issues, not the least of which being unfair dismissal claims.”

Yet Palmer said the backlash faced by British Gas may make employers shy away from trying to change contracts and instead consider alternatives such as redundancies.

She added: “Of course, having to make redundancies during the pandemic also comes with its own problems.

“Fundamentally, it must be remembered this is a difficult time for staff; if the company tries to enforce poorer working conditions on them, they can expect the potential for employees to become very disillusioned in their roles and look elsewhere for employment."

The pandemic's effect on employment:

Organisations lacked pandemic preparation before COVID-19 outbreak

Regions need more control over skills and employment

Post-pandemic pay cuts on the horizon, bosses warn