Fire and Rehire

What is fire and rehire – and why are UK companies using it on their workers?

The tactic of fire and rehire has emerged as a lightning rod for debate in workplaces across the United Kingdom. Officially referred to as dismissal and re-engagement, this strategy allows employers to terminate existing contracts and offer re-employment under revised—often less favourable—terms and conditions.

Although this method has long existed within the broader framework of UK employment law, its increased use over recent years has prompted renewed scrutiny, sparking national conversations on fairness, employer responsibility, and worker rights.

What is Fire and Rehire?

Fire and rehire is a process in which an employer terminates an employee’s existing contract and simultaneously offers them re-employment on new terms. Typically, these new terms involve adjustments to pay, hours, benefits, or working conditions—often framed as necessary for commercial viability or organisational restructuring.

In most cases, the employer justifies this tactic by citing business survival, cost-cutting measures, or competitiveness in the market. However, from the employee’s perspective, fire and rehire can result in reduced income, longer hours, or fewer workplace protections.

While not illegal under current UK law, this method must meet certain legal standards to avoid claims of unfair dismissal. Employers are required to follow a fair consultation process and give due notice. Yet even with procedural adherence, the human cost and reputational impact can be significant.

What is fire and rehire – and why are UK companies using it on their workers?

High-profile Examples of Fire and Rehire

Several major employers have come under public scrutiny for deploying fire and rehire tactics in recent years:

Tesco fire and rehire case faced a major legal defeat when the UK Supreme Court ruled on 12 September 2024 that its attempt to terminate and rehire distribution centre staff—removing a guaranteed “retained pay” supplement—was unlawful, reinstating a High Court injunction to block the practice.
P&O fire & rehire controversy P&O Ferries sparked outrage in March 2022 when it summarily dismissed 786 mostly UK‑based crew members without consultation, replacing them with lower‑paid overseas agency staff—an act widely condemned as a controversial example of fire‑and‑rehire
British Airways faced a backlash in 2020 when it proposed to lay off thousands of staff and rehire a smaller number under different terms, amid the COVID-19 pandemic’s impact on air travel. The move drew political and media attention, with MPs and aviation workers raising strong objections.
British Gas, operated by Centrica, implemented a similar strategy in 2021, dismissing and rehiring engineers after disputes over new working conditions. The move led to widespread strikes and public concern about how major employers were treating their skilled workforces.
Go North West, a bus company in Manchester, also pursued the fire and rehire route during a dispute over changes to drivers’ contracts. This case led to significant industrial unrest and localised disruption.

Each of these examples has brought fire and rehire into the national spotlight, raising broader questions about business ethics, workforce stability, and the responsibilities employers owe to their employees during turbulent times.

Legal and Ethical Considerations

While legally permissible, fire and rehire is often viewed as a last resort. Employment tribunals may take a dim view if companies are seen to exploit this approach without exhausting alternative options. Transparency, meaningful consultation, and an honest assessment of business necessity are essential components for any employer considering this course of action.

Moreover, the practice can risk long-term damage to employee morale, company reputation, and talent retention. In a competitive recruitment landscape, businesses must weigh the short-term financial savings against the potential cost to workplace culture and public image.

Policy and Regulatory Response

Although the UK Government has not moved to ban fire and rehire outright, it has issued updated guidance through ACAS (the Advisory, Conciliation and Arbitration Service), encouraging employers to explore all avenues before considering contract termination and re-engagement. The ACAS report, commissioned by the Department for Business, Energy and Industrial Strategy, highlights that while the tactic is sometimes used responsibly, misuse can have damaging effects.

Calls for stronger regulation continue from some corners of the political landscape and various public interest groups, who argue for legal reforms to better protect UK working people from what they perceive as a coercive negotiation method.

As part of our ongoing commitment to supporting working people, The Workers Union remains vigilant and responsive to all developments concerning employment practices, including fire and rehire. We are dedicated to ensuring that our members are informed, empowered, and supported—especially during moments of contractual uncertainty or change.

Workers facing fire and rehire proposals should seek clarity from their employer, understand their legal rights, and seek appropriate advice before making decisions that could impact their long-term employment status.