Fire and Rehire

0:06 [CJ]: Hello and welcome to this working life podcast, the third in a series of podcast produced by the Institute of Employment Rights. [CJ]: Throughout the series, we'll be looking at the employment rights act 2025. [CJ]: What's in it? [CJ]: What's not in it? [CJ]: And why we believe a second Employment Rights Bill is needed.

0:27 [CJ]: As usual will with the Institute, those involved in these podcasts are all leading experts in Labour Law, the first in this series, heard at Lord John Hendy, speaking to Professor Nicola Countouris on the background to the act. [CJ]: The second was a discussion between Lord Hendy and Tonia Novitz on the right to strike, and today we are kindly joined by Neil Todd, who will delve into the details of fire and rehire.

0:55 [CJ]: But before I introduce Neil I should introduce myself, my name is Carolyn Jones, and I am Senior Vice President of the Institute of Employment Rights. [CJ]: and I'm honored to be here hosting today's session and very pleased to welcome Neil. [CJ]: Neil Todd is a partner at Thompson's solicitors, the largest firm of solicitors, servicing the trade union movement.

1:18 [CJ]: He is a senior employment law and trade union expert and a familiar face in court and tribunals. [CJ]: whenever workers and unions need top-level legal representation, he's also a familiar and welcome face of many institute events. [CJ]: So, Neil, thank you very much for taking the time to speak with me today.

1:39 [NT]: No problem. [NT]: Thank you for inviting me, Carolyn. [CJ]: Good to see you. [CJ]: As I said, we'll be exploring the strengths and weaknesses of fire and rehire provisions in the employment rights act. [CJ]: So, to start with Neil, can we start by reminding ourselves about why changes to the law on fire and rehire were necessary in the first place, please, and perhaps when the new law will actually come into effect.

2:02 [NT]: Yes, thanks, Carolyn. [NT]: It's been notoriously a week area of law for some time, with employers having a great deal of flexibility under the current legislative framework to dismiss employees and re-engage them on less favorable terms and conditions. [NT]: One of the reasons for that really is that the case law provides that they only need to show a sound business reason for it.

2:26 [NT]: The tribunals have very little inclination, and indeed on able under the framework to interrogate that reason very easily, so provide that sort of, that reason can be made out in very broad terms, then they simply need to follow a fair procedure. [NT]: It's a practice that's gone on for some time, I think it probably became more prevalent in the pandemic where we saw high profile examples of it with [NT]: B.A. (British Airways) [NT]: And then British gas in the Input team.

2:57 [NT]: And then we had an ACAS code of practice. [NT]: which was introduced by the government in response to that, but it didn't add much meat if you like to the law in the area, and with very sort of superficial changes. [NT]: And we also had a very high profile event, a P&O, which was probably the most notorious fire on me, higher incident we've seen over the last 50 years of [NT]: employment law [NT]: That was a real watershed moment, and therefore, Labour came with this commitment that something needed to be done, and they campaigned on a manifesto pledge that that would be to ban fire and rehire.

3:38 [CJ]: Yeah, absolutely, and it was about a year ago when you joined us on a previous podcast. [CJ]: I remember you saying that you were skeptical about whether the employment rights bill would be able to stop a repreat of the P&O scandal. [CJ]: From a trade union perspective, do you think the current draft is actually closed as the door on these practices?

4:08 [CJ]: or does it still leave a few escape routes that allow bad practice to continue. [NT]: I think it's a bit of a mixed bag. [NT]: There's been some changes to the... [NT]: I mean, I should say at the outset that what was enacted never actually banned [NT]: fire and rehire and the provision in its original form fell [NT]: Well short of that I know we're probably going to talk about some of the exceptions later in the podcast, but sort of moving forward the provision as it's stood has been changed positively in some ways.

4:36 [NT]: I think does help address the P&O scenario, but in other ways we've also seen some changes that are less advantageous to work as so I suppose on a positive side, the two things that [NT]: immediately spring to mind when the provision was first introduced, it was said to be [NT]: unlawful if you were going to dismiss and re-engage your own stuff on varied terms and conditions or if you were going to recruit so dismiss your own staff and then recruit new employees on those less favorable terms and conditions and that didn't deal with a situation like P&O because what P&O did was dismissed its existing workforce and then effectively engaged at an agency workforce that it would never have a direct employment relationship with.

5:27 [NT]: that was one gaping loophole identifiable in the original provision and that has been closed off. [NT]: So, for instance, it's clear now that it's the you can't fire and replace and employing with a sort of a worker of any description including in those agency arrangements. [NT]: So that's been closed.

5:46 [NT]: Another thing that we were worried about at the outset is the fact that these wide flexibility clauses which effectively you have a term in your contract that says we can change any term in a condition in any stage. [NT]: Now what we have now got is a commitment and a new legislation or should say it's a provision and a new legislation which will make it unlawful for an [NT]: employer to dismiss and re-engage, where it seeks to introduce a variation clause which would allow it to change certain prescribed terms and conditions.

6:20 [NT]: But in other ways, the provisions, are now weaker than it was. [NT]: So for instance, when it was first introduced, it was going to be unlawful to dismiss and re-engage and employee for changing any terms [NT]: and condition. [NT]: And then we move to the fact that not all terms and condition, it wouldn't be unlawful to- [NT]: It wouldn't be automatically unfair, I should say, to dismiss and re engage for all terms and conditions.

6:44 [NT]: That would only only be of interest with prescribed terms and conditions of things like if it was to change your rate of pay, if it was to change your holiday allowance, if it was to change, the hours at which you work. [NT]: and therefore, some terms, it would no longer be automatically unfair to change.

7:02 [NT]: And then even more recently than that, I mean, recently the consultation process about some of those prescribed terms, which we may well go on and talk about, which seeks to narrow, those prescribed terms, and even further, and that's come from very strong voices that the employer and the employer lobby, and it's [NT]: continued emphasis on employers needing flexibility.

7:24 [NT]: And the idea is we were moving away from that one sided flexibility but it's certainly being clawed back. [NT]: And we'll see what happens in respect of the final position on these consultations responses. [NT]: But I am concerned from that point of view that the provision is not strong as it was.

7:41 [CJ]: Oh yeah, well yeah thanks for [CJ]: where the loopholes have been closed, worrying that there are still some gaps. [CJ]: You talked about the consultation process, do you know when that is where are we up to with that? [NT]: It closed on the closed on the first of April, and it looked at two things in broad terms.

8:02 [NT]: The first was, and it looked at expenses and benefits in kind. So what it does is, it seeks to exclude from the restricted variation [NT]: any sort of benefiting client that are paid to employees. [NT]: So that's things like, you know, travel allowances, tied accommodation. [NT]: Those sort of things.

8:35 [NT]: Now there's two options given. [NT]: One is -and the preferred option of the government is- that all payments in kind and expenses would be removed from the definition of [NT]: a restricted variation. [NT]: So what I mean is that it wouldn't be automatically unfair if you wanted to dismiss and re-engage someone to change whatever their entitlement work was and a travel policy or in regard to accommodation it's tied to the salary and you've got to think about in some sectors, perhaps, tied accommodation could be a key thing so if you think about teachers who sometimes live in accommodation provided by the [NT]: school you think about workers on oil platforms, get accommodation if you think about workers in care homes.

9:22 [NT]: that could be a key component of the sort of overall salary package and you will stripping that out of this definition of a restricted variation [NT]: The other option they've put forward but it's not their preferred option is that you would only strip out from the definition of a restricted variation benefits that have the same characteristics of pay.

9:48 [NT]: But even if that was implemented, it's a very difficult line to draw as to what benefits that have a very similar characteristic to pay and what does not, and my few is that they should leave that alone. [NT]: The other side of the consultation is about hours, there's been an incredibly strong employer lobby seeing that hours should be taken out, we should have the freedom to be able to change people's hours.

10:07 [NT]: So the respective variation of looking out now is narrowed in a sense that the government's preferred option is that any restricted variation would only be if it [NT]: changed your hours from day time working to night-time working, or from week working to weekend working. [NT]: And any other variation to those hours will be permissible.

10:29 [NT]: And again, yes, that is addressing perhaps the most extreme changes to working hours, but it can be fundamentally difficult to work as in all sorts of different sectors if their hours are changed in ways that don't fit within those [NT]: narrow parameters. [NT]: And whos to say it's not more difficult for your hours to be changed from working a monday and a tuesday to a thursday and a friday. I mean your whole way [NT]: that you structure your life and your commitments around that could be centred all in that working pattern.

11:05 [NT]: So again, it's unfortunate that it looks like there is a sort of an impetus to make some change there. [NT]: And that will you know, weaken the provision quite significantly, I think. [CJ]: We will wait and see then, the end results of that consultation. [CJ]: Yeah, yeah. [CJ]: Before it actually comes into law.

11:23 [CJ]: You've talked about some of the exceptions. [CJ]: One of the main exceptions is the business necessity or financial difficulty exceptions. [CJ]: Do you think that they risk undermning the protection of the Act and what it was trying to introduce? [NT]: I think when you first look at that provision, you think its fairly narrowly drawn, [NT]: and you would hope that it would only apply in the most extreme of circumstances, but I think that it will be very much dependent upon how it's ultimately interpreted by in the Employment Tribunals and it will be very good to see some guidance around the application of that.

12:06 [NT]: I mean, for example, it talks about the way that its drafted to eliminate, [NT]: prevent or it will significantly mitigate any likelihood of an employer [NT]: either being able to or unlikely to be able to operate and there is concern around the use of that word, 'likely' as likely has a lot of different meanings within the employment law framework.

12:38 [NT]: And if you took 'likely' as something that may happen, then you can start to see that it becomes more difficult you get employers who can present their sort of financial position in a multitude of different ways. And there is a risk of massaging the [NT]: financial viability of the company and presenting a court with a position where it can be shown at this is likely to happen on that work.

13:09 [NT]: And basically that provision isn't strong as in addition to peers at first glance. [CJ]: I know at the Institute in one of our previous briefings briefings, we suggest that an independent auditor [CJ]: should be used to confirm the changes are generally essential for survival with the health and it's even likely to be introduced.

13:36 [NT]: I think that definitely would help. [NT]: It's also a point we made in our consultation response at Thompsons. [NT]: I don't think there's absolutely no chance to see anything like that written into the provision. [NT]: But yeah, I mean, what would be to stop and offer some guidance saying that that is the sort of level of evidence that employers would be expected to show.

13:59 [NT]: I think that would be useful both in terms of proving what the true financial situation is. [NT]: I think it would give employers certainty to understand what position they need to be in and what evidence they need to show when they're going to, you know, they're going to defend their case on the basis of relying on this exception.

14:16 [NT]: And it would be sort of at least a win for the trade union movement in terms of, you know, being able to pin the government to showing that this is, [NT]: What it meant to be- about a very, very serious financial situation, it's threatening the existence of an organisation. [CJ]: Yeah, absolutely, yeah.

14:34 [CJ]: Thanks for that [CJ]: You mentioned from the trade union perspective. [CJ]: What key reforms do you think are still missing if the goal is to genuinely prevent fire and hire practices rather than to regulate them, which is what the act seems to do at the moment? [NT]: Yeah, I suppose to pick up on some of the points that we've already discussed- [NT]: one thing that, well, one thing that I think is missing that we haven't touched upon today is a round remedy.

15:09 [NT]: What the act initially did, sorry- when they were consulting about the provision, what they talked about was the potential to have interim relief available for dismissal's related to fire and rehire. [NT]: And that would have been really important because we have a legal framework which is punitive in nature. In other [NT]: words that you as an employee dismiss your employees and then the way it works currently, but the Tribunal overload is that you wait 12 months to have a hearing atleast [NT]: And what interim relief would have done it would have made a significant difference in terms of giving the possibility of preventing those employees from being dismissed in the first place it would require the employer to continue to employ you them if you're able to establish in your case.

15:58 [NT]: at an interim relief hearing, employers are then compelled to continue to pay those employees until a full hearing, and that would have prevented some of these sort of worse case fire and rehire situations from happening in the first place. [NT]: Now the government said that would be too difficult.

16:17 [NT]: It would be too much of a burden on the employment tribunal, so level of evidence that you have to show in a trial will be too great to do and so to show it is a waste of time. But I really think that that is missing a trick and that sort of strong remedy is [NT]: the most effective way of stopping fire and rehire.

16:39 [NT]: In terms of other things that they could do, it comes back to this point around [NT]: the consultation. [NT]: My view is, I think, it's very unfortunate that they moved away from all terms and conditions being protected in the first instance and that there's now a two-tier system with restricted variations.

16:59 [NT]: But I would strongly urge that there was no further watering down if there was restricted variations and that they remain in full and no regulations are being implemented to narrow that to carve out certain shift pattern changes, [NT]: payments in certain benefits in kind, or expenses. [NT]: Unfortunately, it doesn't look like that's the direction of travel, but that would at least, I suppose, stand by the original provision that was made rather than watering it and watering it down further.

17:32 [NT]: I think an absolute barn is [CJ]: financial exception to that everybody is comfortable that that is just about the most extreme you know the most extreme say something to every welcome that's on right yeah hello everybody that the institute has done over the years as you know and often with Thomson's is looking a bit broader than provisions for fire and rehab would be [CJ]: If we had something like sector-collector bargaining, then that P&O situation that you described would be much more difficult because if terms and conditions were set across a sector, then you wouldn't be able to have an employee at life being known, being able to recruit new staff.

18:19 [CJ]: On lower terms and conditions that were actually being implemented across that sector, so that's also, but I mean that's much broader than just a fire in me. [CJ]: It is a fundamental [CJ]: Would be a fundamental basis that I'm going to be for to have it? [NT]: I agree and I think that that is something that creating is most continue to fight for, and obviously that is a key course sort of why they have a thing that the second bill would be good idea when we could drive wider changes, and wider changes on the nature.

18:52 [NT]: I don't think you can lose sight of that being a real him for the future. [NT]: great. [CJ]: So, the act still will last heavily on individual tribunal claims and compensator compensation after dismissal from your experience, represental unions, is that model strong enough to determine large employees?

19:17 [CJ]: Or does it risk being treated as a calculable cost that they employ from building into its planet? [NT]: I think it's still a real risk that they're calculated in our system, you all know that that's what PNO did, they did a sort of a corporate calculation, worked out that it would be bad to reach settlement agreements and no settlement agreements for the Royal Employee [NT]: rather than a deity law.

19:50 [NT]: Now, we've seen some steps to address that, for instance, we've talked about some of them today, in other obvious example, is the bookling of [NT]: in April. [NT]: But, you know, we talked about interim relief earlier in fire and re-high situations. [NT]: They talked about the option of interim relief both with regard to fire and re-high.

20:15 [NT]: And in regard to a failure to collectively consult and they disregarded that as a step. [NT]: And that would have been the clearest, the clearest thing to do. [NT]: to signal that you can't prove by your way out with it. [NT]: So we're still left in a situation, I think, where, yes, the financial penalties are now going to be slightly more significant, but it's no extra funding for employment tribunal.

20:36 [NT]: So any financial compensation workers do get it's likely to be one or two years down the road and you know that [CJ]: Yeah, and as you know, because I think Thompson's were involved as well. [CJ]: I mean, there is a piece of legislation already sitting there, ready to be considered through the Barry Gardeners book.

21:34 [CJ]: It was many years ago. [CJ]: That proposed many of the things that we're talking about here today, and it's still six there, but not implemented. [CJ]: Maybe we could revisit that. [NT]: Yeah, it's, it's, it's, it's, it's not being given any air tide really has it through the employment bill and they're very much taking things into and other direction.

21:56 [NT]: work is right in many respects about many of the issues that we're talking about today. [NT]: Well, people are looking at if we need to, but if, and probably when we need to be spent for the game, if we get to the stage where a second build becomes a real possibility. [CJ]: Well, as you say, that seems to be a bit more on the campaign entry, but at the moment, campaign for changing your freedom for few unions, [CJ]: other organisations even some MPs and I'll come and down to do we need and other employment rights bills to fill the gaps that this current act has failed to deliver.

22:32 [CJ]: Great, well I think we are out of time and so near it sounds like [CJ]: when while the extranthons protections on paper there is still some concerns from a trade union perspective about loopholes about employee of flexibility and whether enforcement is strong enough to prevent situations like P&L happening again.

22:52 [NT]: I think that's a right comment. [NT]: I think that this was all the power [NT]: It was given the label and ending one side of flexibility, but we're seeing more and more of that creeping back in all the government consultation papers and how are Continuously sounding this idea that employers need flexibility should do a B and C, and that seems to be moving away.

23:14 [NT]: That narrative in particular seems to be moving away from what you're wanted from this bill. [CJ]: Absolutely. [CJ]: each time there's a consultation you should have a little fun. [CJ]: What you're going to lose next Well, absolutely. [CJ]: Well, that's been really interesting Neil. [CJ]: Thank you for for that.

23:31 [CJ]: Thank you for joining us. [CJ]: Thank you for being so generous with your time and sharing your experience with us and we look forward to seeing the podcast in the on the next series. [CJ]: So thank you very much. [CJ]: Thank you.