Fire and rehire and TUPE
[page 63]What if, instead of seeking to agree a variation of the contract, the old employer dismisses the employees at the point of transfer and the new employer offers them re-engagement on less favourable terms?
Meade and Baxendale v British Fuels Ltd [1999] 2 AC 52 confirms that the dismissals will bring the old contracts to an end. Therefore, the acceptance of new terms and conditions offered by the new employer is not void. However, regulation 7 TUPE says a dismissal is automatically unfair if the sole or principal reason is the transfer itself; or a reason connected with the transfer that is not an economic, technical or organisational reason entailing changes in the workforce.
This means that in most situations, fire and rehire at the point of transfer will be unfair dismissal. This will also be the case for fire and rehire after the transfer, although as time passes, the connection to the transfer is likely to weaken..