Workplace Report (June 2021)


Unions fight fire and rehire

It is not new for employers to threaten the sack in order to change employment contracts, but the way it has been so widely used during the pandemic is. We examine what is at stake and how unions are responding

British Gas, British Airways, Heathrow Airport, Sheffield University and Go North West are some of the better-known employers that have been prepared to threaten workers with the sack during the pandemic in order to secure changes in employees’ terms and conditions.

They are just part of a wider problem. With the UK government said to be “sitting on” a report into fire and rehire by the advisory service Acas, Workplace Report has identified 23 cases where pressure of the “there is no alternative” kind has been deployed as an industrial relations tool.

The outcomes in these cases have been mixed:

• there have been clear victories for unions, most recently at the Go North West bus company but also at SPS Technologies, Securitas, Sheffield University, and at Tesco Distribution in Scotland (see below); and

• there have been negotiated outcomes, where at least some of the employers’ objectives have been tempered or mitigated – that was the case at British Airways (although the dispute over cargo workers’ terms and conditions continued into January); for white-collar staff at British Gas; and in a less high-profile case at disability charity Aspire Living; but

• there have also been actual sackings where workers were not ultimately willing to bend to the employer’s proposals, as in the case of hundreds of British Gas field engineers represented by the GMB, porters at Birmingham’s Heartlands Hospital represented by UNISON, and at Tower Hamlets.

Although this employer tactic has been widely condemned, even by leading Conservative politicians, there is little in law to prevent it (see Box 1). Changes are often forced through without dismissals being implemented, or even Section 188 notices being issued.

Box 1: Weakness in the law

Contract terms can be changed by agreement, including by collective agreement with a recognised union, whereas a change without agreement is likely to be breach of contract. But in fire and rehire the employer is giving (or threatening to give) notice to end the employment contract while at the same time offering a new contract, using Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) as the legal route.

Ending the contract is still a dismissal, so employees with at least two years’ service can claim unfair dismissal. And if the proposal is to dismiss 20 or more employees within a 90 day period it will trigger the statutory duty to consult collectively with the union. However, an employee who refuses to accept unfavourable changes to terms and conditions can be fairly dismissed for “some other substantial reason”, as LRD’s the Law at Work and other booklets explain.

Factors a tribunal would take into account in deciding on the fairness in any particular case could include evidence of genuine consultation and there being a sound business reason, with any injustice to employees carefully weighed and alternatives considered. Whether the employer used fair and not misleading arguments to encourage employees to accept the deal could also count. The fairness of any dismissal could also depend on what proportion of the workforce accepted the changes: the higher the proportion, the more likely those “holding out” are to be fairly dismissed.

Just the threat itself may be enough for the employer to win the day. As post-lockdown realities take shape and the end of the furlough scheme looms, there may well be more cases, so it is worth taking stock of what it is that employers have been trying to achieve, and what tactics unions have deployed in response.

One of the most notorious cases has been Centrica/British Gas, and the experience of the company’s 7,500 field engineers is well-known. Represented mainly by the GMB union (Unite is also recognised) they were asked to work an extra three hours a week (40 hours), lose their weekend and bank holiday premiums, and accept a new performance management system (CTAP) along with a three year pay freeze, described by the GMB as a 15% pay cut.

Although Acas got involved, it ultimately came down to a straight industrial fight, and after 43 days of strike action by field engineers there were hundreds of dismissals. The case of the staff side at British Gas is less well-known. UNISON is the majority union but works alongside the GMB. Along with the rest of the workforce they were threatened with fire and rehire last year, but a negotiated settlement was reached (see Box 2).

Box 2: British Gas staff perspective

The fight by GMB-represented field engineers at British Gas was one of the most hard-fought struggles over fire and rehire changes, but on the staff side the dispute took a different course.

Matt Lay, UNISON’s lead officer for the company, explained that energy retail has become far less profitable and there have been significant workforce cuts, 5,000 over the last year. Although the business had invested heavily in industrial relations, with the arrival of a new chief executive there was a breach of trust, an agenda for radical change which they knew would be unpalatable: “We hadn’t been given an opportunity to have a meaningful engagement, when they served notice on the collective arrangement. I thought the business was deadly serious, this is what they would do, and would take all the flack”. On the white collar side, where the mainly-female membership is less well remunerated, negotiators from both unions “wanted to see what was possible before they served notice”.

Matt’s assessment is that the company’s “ask” of staff side members was not as great as it was for field engineers. The business wanted greater simplicity and efficiency, but in the customer world that can be advanced though digitisation or offshoring.

Staff side negotiators came up with a series of different changes, which were put to members on a “neutral” basis. People were not happy and UNISON was ready to launch an industrial action ballot, but a new collective agreement was arrived at. Section 188 notices were never fully acted upon, but the business had made it clear that to withdraw the notice would mean they could not reintroduce it.

At the end of the day, Matt believes, the company is still a big UK-wide employer with good terms and conditions and a good recognition agreement, whereas the competition is un-unionised and cut-throat, “and we do still have an industrial relations process with these people”.

The negotiated staff-side settlement included:

• no working hours change, 37 hours retained;

• within the three year pay freeze, when negotiators reconvene they will “recalibrate” pay to the upper quartile rather than the market median, which is what the company wanted;

• annual leave is harmonised to 25 days, with protection for those who had better entitlement; and

• 2% of pre-tax profit shared with workers through free shares worth about £750pa.

• a £1,000 payment partly to reflect the removal of a non-contractual benefit and no pay increases until 2024.

Disability charity Aspire Living managed to push through changes to terms and conditions without any contractual notice of fire and rehire, having told over 300 care staff last November that they had 30 days to accept or be dismissed. A settlement finally accepted by members included a £200 Christmas payment, protection for staff affected by the changes, a backdated pay rise and a promise to look at a future pay rise next year.

Members reluctantly accepted this outcome, buoyed up – perhaps – by the hope that future pay rises would make up for their losses. In football terms, it felt more like a “no-score draw”, regional organiser Ray Salmon told Workplace Report. But terms and conditions have been undermined and UNISON fears the overall losers are likely to be service users.

What’s at stake?

Imposition in itself is troubling for trade unions, and facility time for reps may be one of the casualties, but employers in the 23 cases listed in Box 3 had more specific objectives:

• pay cuts;

• cuts in paid hours, an increase in unpaid hours, or other changes in working time including workforce cuts;

• changes to pension or retirement provisions;

• shift/unsocial hours or out of hours pay;

• sick pay and life assurance;

• annual leave;

• allowances and overtime premia;

• use of lower grade staff, pay progression and promotion;

• home working;

• redundancy pay; and

• breaking with a national agreement.

Pay: Pay cuts stand out as the most common threat, accounting for at least 10 of the examples in Box 3. Threatened and actual losses cited by unions ranged from percentages (20-25% for BA cargo, 25% at Heathrow) to big cash sums (from £3,200 for STVA car delivery workers to up to £15,000 at Brush Electrical).

Working time: Low-paid staff working for ESS on a Ministry of Defence contract faced cuts in paid hours and the working week; the opposite of the longer hours demanded by British Gas and Go North West (where the sick pay agreement was also at risk).

Unite had been in negotiations with the bus company over ways to save £1 million and maintain job security. But after 85 days of strike action a nationally-negotiated deal accepted last month means drivers “no longer stand to lose thousands of pounds in wages every year”, while the employer agreed never to use fire and rehire in any form.

Pensions and retirement: A fire and rehire dispute at drinks manufacturer Jacobs Douwe Egberts was triggered by plans to end the final salary pension system and introduce an inferior scheme. There was a similar scenario at Loughborough Schools Foundation, over a “forced removal” from the Teachers’ Pension Scheme (TPS). The NASUWT union was considering balloting for industrial action, following a staff vote of no confidence in the consultation, and letters of concern from parents. Luke Akhurst, Leicestershire NASUWT secretary said a number of staff were actively looking or moving jobs as a result, seeing the plan as “a choice not a financial necessity”.

Shift premia: Heineken’s cider brewery in hereford joins the fire and rehire list because of its plans last November to cancel Sunday shift premiums, cut holiday pay and change the terms and conditions for flexible working, and changes to retirement rundown benefits.

Sick pay and life assurance: In March, pharmaceutical manufacturer BCM Fareva issued a fire and rehire threat if there was a failure to agree proposals to cut pensions, life assurance, sick pay and redundancy payment provisions for Usdaw-represented workers.

Allowances: Last summer’s strikes at the London Borough of Tower Hamlets were triggered by the imposition of a new Tower Rewards contract, which – UNISON said – would see staff lose vital allowances and result in pay cuts for out of hours work.

Staff roles: Trouble erupted in Scotland’s further education sector in March this year over an employer-proposed change in the definition of the role of lecturer, opening the way to wider use of instructor/assessor grades. While roles of this type have existed for a long time, the EIS-FELA union says they have been increasingly replacing lecturer roles and positions, while Forth Valley College forced some lecturers to choose between being made redundant or becoming an instructor/assessor.

Home working: Striking workers from the referencing department at lettings platform Goodlord said fire and rehire would see many salaries reduced by £6,000 to below the real London Living Wage. With employees working from home due to the pandemic, the employer apparently decided that the job function could be done permanently from home, allowing it to “recruit nationally”.

Pay progression and promotion: Sheffield University dropped its fire and rehire threat in August last year, having previously proposed the cancellation of promotions and a reduction in hours and salary (as well as voluntary redundancies and pay freezes) in an attempt to save £100 million.

National agreement: Intermittent strike action at Saica Pack in Edinburgh followed a company decision to detrimentally vary the contracts of Unite members as they relocate to the new Livingston site in 2022, but halted in April as members considered a revised offer. Reported as a “significant step forward”, talks are expected to reset their relationship and secure a new national agreement.

Box 3: Employers who tried fire and hire during the pandemic

1. Aspire Living (December 2020): over 300 staff affected by cuts to annual leave, sick pay, overtime, and an option to reduce pensions. The dispute was settled with a £200 payment, protections and pay rises.

2. BCM Fareva (March 2021): 800 workers were affected by proposals to cut pensions, life assurance, sick pay and redundancy payment provisions. Usdaw is balloting for possible industrial action.

3. British Airways (2020-21): the initial threat to all 12,000 staff was mitigated by agreed reductions to terms and conditions but 850 cargo workers continued the dispute over 20-25% pay cuts into January, when a deal was reached.

4. Brush Electrical (April 2021): 30 global field service engineers faced pay cuts of up to £15,000.

5. Centrica/British Gas (2020-21): after the initial threat to all 20,000 employees, there was a negotiated settlement for customer operations staff, but hundreds of the 7,500 field engineers were sacked after protracted strike action.

6. ESS/Compass (October 2020): the dispute involved cuts in hours and the working week for staff on an MOD contract, but Section 188 notices were not issued.

7. Further Education (Scotland) (March 2021): a proposal to replace some lecturers with lower-paid, less qualified staff triggered intermittent strikes among 5,500 academic staff.

8. Go North West (2020-May 2021): a proposed 10% cut in driver numbers, increased unpaid working hours, and sick pay cuts triggered 85 days of strike action affecting over 300 workers but a nationally negotiated settlement was accepted.

9. Goodlord (February 2021): pay cuts of up to £6,000 affecting 20 tenancy-referencing staff, arising from the employer’s instance on home working.

10. Heartlands Hospital (January to March 2021): around 80 porters took strike action over pressure to accept worse shift patterns. Dismissals took place in February.

11. Heathrow Airport (October 2020-March 2021): a dispute over pay cuts of up to 25%/£8,000 led to targeted strike action but ended with a deal to help restore pay members lost as a result of being forcibly fired and rehired.

12. Heineken (Hereford) (November 2020): proposed changes affecting around 200 staff with cuts affecting retirement run-down, benefits and changes to shift premia, holiday pay and flexible working.

13. Jacobs Douwe Egberts (March 2021): proposed replacement of final salary pension with an “inferior” defined contribution scheme, leading to strike action, 291 workers potentially affected.

14. Loughborough Schools Foundation (March 2021): proposed “forced removal” from the Teachers’ Pension Scheme (TPS).

15. Oxford Mail and Times (May 2021): notices issued after the NUJ rejected the ending of time-and-a-half for most bank holidays (affecting 15 journalists).

16. Saica Pack (March 2021): proposal to extend the working week and introduce banked hours, in breach of an industry-level agreement.

17. Sandwell Leisure Trust (2020-April 2021): changes affecting pay for 280 staff, as the trust ended its adherence to the NJC national agreement, led to a one day strike on 30 April.

18. Securitas (Airbus Filton) (December 2021): 10 “first responder” staff set to lose up to £6,000 through transfer to the site’s security rota; resolved without a strike.

19. Sheffield University (July 2020): proposal to introduce inferior contracts using Section 188 withdrawn.

20. SPS Technologies (April 2021): proposals reducing pay by up to £3,000 for around 200 staff led to discontinuous strike action and a deal which saw the initial reductions proposed by the company slashed by more than half.

21. STVA (April 2021): merger threatening pay losses of up to £3,200 for car delivery workers.

22. Tesco (May 2021): changes that would cut wages for 74 workers at distribution centres in Daventry and Lichfield challenged at the High Court, following an earlier success at the Scottish Court of Sessions.

23. Tower Hamlets (July 2020): inferior “Tower Rewards” imposed on the majority of the workforce through fire and rehire.

Resisting fire and rehire

UNISON policy officer Dave Arnold points out that disputes like the one at Sandwell Leisure Trust arise when management take a “there is no alternative” approach: “You have to ask why employers reach for this tactic when a negotiated settlement would be better for them and UNISON’s members. We need a greater sense of shared endeavour, how to move forward in challenging circumstances”.

There are certainly plenty of angles to consider: are staff being treated equally or is fire and rehire exacerbating tensions? Is the employer bigging-up “volunteers” for change, or does it acknowledge that it is using compulsion? Are its justifications Covid-related or is that just a smokescreen? Are contracts being changed when furlough would tide things over? Is there a willingness to negotiate, for example over cost savings? And, perhaps most tellingly, are the proposed changes temporary or permanent?

Faced with a management willing to threaten workers with the sack, what other options are there? During the dispute at Centrica, the GMB launched a “Stop the British Gas fire and rehire” petition, and hailed a temporary retreat by the company last October after “sustained pressure, condemnation and public and political outcry over the proposal to sack the entire British Gas workforce”.

Getting influential politicians on board is another common tactic. In the Go North West dispute the union appealed to elected mayors in Greater Manchester and London to bar employers using fire and rehire tactics from bidding for bus contracts.

In Scotland’s FE sector, where the dispute broke out two weeks before the Scottish parliamentary election, EIS-FLA quickly produced a briefing for MSPs.

In the case of Tower Hamlets, it was a Labour council that was using fire and rehire. Now there has been a return to the negotiating table and meaningful consultation has been proposed – but only after protracted, significant industrial action.

Parliamentary scrutiny can potentially help. At a BEIS Select Committee on February 2, Centrica’s CEO Chris O’Shea told MPs he “regretted” the company’s interpretation of the law which led to him issue dismissal notices. However, his regrets did not end the dispute with the GMB.

Changing the law?

Legal channels to block fire and rehire would be widely welcomed, but are generally not available. An Usdaw-backed appeal to the Court of Session in Scotland secured a temporary prohibition (interdict) stopping fire and rehire changes at a Tesco distribution depot. A similar case concerning three of the company’s depots in England is now being heard at the High Court.

In the case of Jacobs Douwe Egberts, Unite said in April that it was starting legal proceedings over allegations that some workers were offered inducements to accept pay cuts and inferior conditions. It highlighted reports that the company would stop workers from taking summer holidays to thwart an overtime ban.

There is scope for legislative change, as indicated by a 10 minute rule bill last year. The Labour Party is taking an interest and some proposals for legal reform have been set out by Alan Bogg, of Oxford University . Governments in Scotland and Wales are open to ideas about social partnership and dialogue with trade unions.

However, the chances of success right now against fire and rehire seem to rely substantially on unions’ ability to take industrial action.

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