Fire and rehire – why employers need to watch out

For many years organisations have been using dismissal and re-engagement, often referred to as ‘fire and rehire’, as a method available to make a contractual change between the employer and employees. However, in February 2022, the High Court issued an injunction against Tesco, preventing them from operating this way.

The Tesco case – what happened?

In 2007, Tesco made operational changes. They relocated warehouses and staff working in the warehouses, with staff retaining pay. Tesco assured the employees that the retained pay would remain and could not be removed – it was to be a permanent clause within their contracts.

However, long term, Tesco did not view this as sustainable, and in 2021, employees who had retained pay featured in their contracts were offered a monetary incentive to encourage them to ditch the retained pay clause. Although this was offered to employees as optional, they were also all informed that contracts were going to be terminated if they did not agree. Employees who chose not to take the incentive were to have their contracts terminated by Tesco but were to receive an offer of re-engagement. Ultimately, Tesco sought to fire and rehire in order to remove the retained pay from the employees’ contracts.

In February, the High Court issued an injunction against Tesco to prevent this from happening, but now The Court of Appeal has overturned this decision, allowing Tesco to go ahead with its plan to fire and rehire.

What does this mean for businesses?

When the High Court offered its judgement in February, there was a lot of worry about what this would mean for businesses as the hire and rehire route was effectively outlawed. However, The Court of Appeal now going back on this view means that employers can fire and rehire employees without worrying about legal repercussions, but this does not mean it should be a frequently used method.

What are the risks of fire and rehire?

Employees have a growing awareness of their rights, and although employers can utilise a fire and rehire process, it is unlikely to make them popular with their own employees or the general public. Now the precedent has been set, more claims can be brought against employers using this system, so it is always important to consider if the risks of litigation and bad publicity will be less than the benefits of fire and rehire will provide.

To discuss this, or any other related matter, please contact Jane directly on 01483 887766, email or start a live chat today.

*This is not legal advice; it is intended to provide information of general interest about current legal issues.


Jane Crosby

Partner, Head of Dispute Resolution & Accredited Mediator

Jane is a Partner based in the Guildford office and she is also Head of the Dispute Resolution team here at Hart Brown. Jane specialises...

Jane Crosby -Head of Dispute Resolution

Partner, Head of Dispute Resolution & Accredited Mediator

Jane Crosby

Jane is a Partner based in the Guildford office and she is also Head of the Dispute Resolution team here at Hart Brown. Jane specialises in employment Law and commercial litigation and brings more than 15 years' experience to her role.

Prior to entering the legal profession, Jane was employed in the aviation industry. This experience is appreciated by many of Jane's clients who note that she is able to take a commercial and pragmatic approach to any legal issue that they face.

Jane acts for a wide range of individuals and businesses and her areas of specialism include aviation, property related industries and IT. Jane regularly advises on aspects of employment law, such as settlement agreements, employment contracts, policies and procedures, redundancies, equal pay, data protection, issues arising from TUPE and reorganisations, the calculation of holiday pay, bonus and commission payments, disciplinary and grievance issues, dismissal and termination issues, the protection of confidential information and the enforcement of restrictive covenants. Jane gets involved in GDPR training for her clients and she is able to deliver tailored employment law training sessions upon request.

As a commercial litigation lawyer, Jane also deals in shareholder and directors disputes, commercial contract disputes and the enforcement of restrictive covenants.

Jane has been involved in successful high value commercial litigation for clients in the High Courts, she is an accredited mediator and she is a member of the Employment Lawyers Association.

Jane is often asked to write for a number of well known publications, including The Daily Mail, The Telegraph and The Week and she has been interviewed on BBC Radio 4.

Here is small selection of the feedback that Jane has received:

“Jane, I cannot sincerely thank you enough for your wise counsel and am delighted to have made your acquaintance. If I am blessed with a new position somewhere I will hand over my contract in the first instance to you. Likewise, any of my friends, peers, romans and countrymen wanting advice, I will point them in your direction.”

“Jane, you have been most resilient on my behalf for which I sincerely thank you for all your endeavours. I have a tremendous working relationship with Hart Brown and you have undoubtedly compounded this further."

“I appreciated the clarity of advice given at a stressful time”.

“A sensitive and highly professional approach and efficient work in the interests of the client”.

“Your advice, conduct and assistance have been indeed outstanding and very professional but also – and most importantly – very humane”.