Firing & rehiring employees - watch out for the pitfalls

This brief aims to contrast the law in Ireland and the UK as regards firing and then rehiring employees. This often arises where an employer wishes to alter an employee’s contract but the contract does not include a variation clause and the employee does not consent to variation.

The UK

In the UK, in the absence of an express right to vary, it is possible for the employer to terminate the existing contract by serving notice and then on expiry of the notice immediately re-employ the employee on updated terms and conditions. This brings a danger of an unfair dismissal claim. Hogg v Dover College (1988) has established that an employee can bring a claim for unfair dismissal even where s/he has been re-employed by the same employer. 

However, under the Employment Rights Act, redundancy or “some other substantial reason” justifying dismissal are among the grounds in which dismissal can be deemed fair. Whether any particular reason will be accepted will depend on the employer’s circumstances and whether the employer acted reasonably and equitably. The traditional case of Hollister (1979) highlights the deference to be afforded to the employment tribunal in making this decision and how a person may be found to be reasonably dismissed for failure to take up a new contract.

The UK courts have primarily dealt with this in the context of re-employment after redundancy. In Martindale (2007), it was found that the method of selecting the employee who will get the new role must at least meet some criteria of fairness. However, in Morgan v WRU (2011), the EAT found that the employment tribunal need only comply with the relevant statutory provisions and no particular test applies in respect of the re-selection process. It found that an employer is entitled to appoint someone who does not meet the proposed person specification and there is a difference between the requirements in selection for redundancy and re-employment.

Ireland

The position in Ireland is significantly different due to the existence of the constitutional rights to work and earn a livelihood. An attempt to unilaterally terminate has to be for a valid reason and in compliance with the Constitution and the statutory provisions with a strict analysis undertaken.

The Irish legislation has also tried to limit fire and rehire techniques in specific contexts. For example, where an employer attempts to avoid the Unfair Dismissals Acts by re-employing the employee within 26 weeks of dismissal, this will not break continuity of service. Additionally, for the purpose of redundancy, an employee is not taken to be dismissed if her/his contract  is renewed or s/he is re-engaged by the same employer under a new contract with the same terms and this takes effect immediately (or within 4 weeks with prior notice).

All employers should be careful in recognising the distinction between the position in Ireland and the UK and the stricter stance taken in Ireland in firing and rehiring situations. When seeking to change terms and conditions, it is important to remember that it is not possible to simply fire and re-hire in Ireland. If you wish to change employee terms and conditions, you should first look at the contract of employment and seek to gain employee consent to the changes. There are a variety of ways to inform and consult with employees in Ireland and consent may be sought by way of acquiesce as well as direct consent. If you need to make changes to employee’s terms and conditions, get in touch and we can help plan the steps required.