Every Little Helps: Permanent Benefits, Contract Interpretation, and ‘Fire and Rehire’

Abstract

‘Fire and rehire’ describes a scenario where the employer proposes a modification of contractual terms and conditions and uses dismissal to elicit agreement from a reluctant worker. Ordinarily, contractual variation requires mutual agreement supported by consideration.1 Where the worker refuses to accept the proposed variation, in ‘fire and rehire’ the employer terminates the existing contracts with notice and then issues new contracts containing the revised terms and conditions. Either the worker refuses, in which case she is out of a job, or she accepts the new contracts with revised terms, in which case the employer gets its way. The main legal constraint on this practice is the unfair dismissal regime, which in its current form provides relatively weak protection because of its solicitude for managerial prerogative in business and reorganisation dismissals.2 ‘Fire and rehire’ is a controversial practice because the current law on unfair dismissal does not restrict legally compliant ‘fire and rehire’ to circumstances of economic necessity or business force majeure. It might be possible to implement legally compliant dismissals where the employer used fair procedures, even where it had other economic options open to it. In circumstances where ‘fire and rehire’ is simply expedient rather than necessary, it may be regarded as unjust and exploitative. It has certainly been controversial as an opportunistic post-lockdown response to the economic downturn resulting from Covid-19.