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‘Fire and rehire’ tactics rife at firms that are in profit and claiming Covid cash

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Tom Wall
·5-min read
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<span>Photograph: Sophia Evans/The Observer</span>
Photograph: Sophia Evans/The Observer

Nearly 70% of companies accused of launching fire-and-rehire assaults on workers’ wages and conditions are making a profit and half have claimed government support during the pandemic.

Boris Johnson has called the practice “unacceptable”, but ministers have also insisted that firms in financial difficulty must have the flexibility to offer new terms and conditions.

Analysis of financial reports by the Observer shows 9 of the 13 private employers accused over the past year of threatening to dismiss and re-engage staff on worse contracts have managed to maintain healthy profit margins, with some even increasing executive pay.

This came after hundreds of British Gas engineers who refused to sign up to longer hours under the firm’s controversial dismiss and re-engage scheme last week lost their jobs. Yet British Gas reported profits of £80m in its most recent update, while its parent company, Centrica, received £27m under the UK government’s job retention scheme. Centrica chief executive Chris O’Shea’s remuneration package increased last year by more than £100,000 to £765,000.

TUC general secretary Frances O’Grady said fire-and-rehire practices had hit almost one in 10 workers throughout the pandemic. “This research shows how some firms are cynically exploiting the crisis to drive down pay and conditions,” she said.

Bus drivers employed by Go North West, part of the Go Ahead Group, claim the firm gave them eight days to sign up to new contracts in February. At least 400 drivers in Manchester have been striking against the changes, which their union, Unite, claims will increase working hours without additional pay. Go North West denies it is using fire-and-rehire tactics.

Go Ahead Group reported nearly £80m in operating profit last year. Its regional bus services recorded £12.3m operating profit in the six months up to January, with the group attributing this partly to the government’s financial support for buses during the pandemic. The group also claimed up to £350,000 under the government’s job retention scheme.

Hundreds of low-paid, outsourced caterers and cleaners working on Ministry of Defence sites for ESS, which is part of the multinational Compass Group, claim they were bullied into agreeing to devastating cuts in working hours at the end of the summer. “ESS gave them no choice. They told them to sign on the dotted line or they would be made redundant,” said Caren Evans from Unite, the union that represents the staff. “Many are women who have worked in the MoD for years and now they are struggling to feed their families or they are out of work. It is shocking that they would do this in a pandemic.”

Compass Group, which operates in 45 countries, announced a £294m profit in 2020. It received £437m in state support, including the furlough scheme in the UK.

ESS said it was incorrect to suggest it had fired and rehired staff. “We have undertaken a restructuring programme to reflect our new operational model, as part of a three-year plan,” it said. “We have done all that we can to protect jobs, such as introducing new working hours and more flexible employment opportunities.” There have also been strikes against contract changes at fast-expanding startups during the pandemic.

Scott Hunter says he was given a choice to take a pay cut or become unemployed.
Scott Hunter says he was given a choice to take a pay cut or become unemployed. Photograph: Sophia Evans/The Observer

Staff at the London-based Goodlord, which provides software and references checks to estate agents, claim they were subjected to hire-and-fire style tactics at the end of last year. “We were given a choice to take a pay cut or become unemployed,” said Scott Hunter, who works in the firm’s referencing department. “I’ve worked there for three years on precarious contracts. They wanted me to take a contract with a lower-rate pay, which is below the London living wage.”

Hunter, 29, said several colleagues had been forced to move in with their parents as they couldn’t afford to pay their rents on lower pay. “Goodlord like to brand themselves the nice face of a lettings industry – but they are pushing us out of our homes,” he said.

Goodlord said: “It’s highly misleading to suggest that this is a ‘fire-and-rehire’ situation. Instead, a number of staff on temporary contracts were offered the opportunity to take up a permanent role with the business, with the vast majority now working as permanent members of our team.”

Public sector and non-profit employers also stand accused of using fire-and-rehire threats during the pandemic. The Observer has identified at least six instances in the past year where staff working for councils, universities and even the NHS have been subjected to such tactics.

Porters at the University Hospitals Birmingham NHS trust claim they were threatened with dismissal if they did not accept shift changes in February. Claire Breeze from Unison said: “Some porters were in their 60s and 70s. They worked through the pandemic,” she said. “It is shocking that this dirty tactic has been used in the NHS against such loyal, hardworking staff.”

University Hospitals Birmingham NHS trust said all porters accepted the changes and no dismissals or offers of re-engagement were necessary. “The decision to introduce a new rota followed a period of collective consultation on proposals designed to create more opportunity for staff progression as well as improve patient care,” said a spokesperson.

Nigel Featham, Go North West managing director, said: “We emphatically reject the characterisation of this as ‘fire and rehire’. Over 80% of drivers signed up to the agreement voluntarily but local Unite reps declined to put it to its membership, instead opting to ballot for strike action.” He said Go North West was losing nearly £2m a year due to outdated working practices.

Centrica said 98% of the company had accepted new contracts and its gas service engineers remained some of the best paid in the sector. “While change is difficult, reversing our decline, which has seen us lose over 3 million customers, cut over 15,000 jobs and seen profits halved over the last 10 years, is necessary,” it said.