Have you been hearing about the term “hire to fire” in employment discussions and wondered why it has such negativity attached to it?
This employment method has lately been adopted by private companies and employers who wish to reduce responsibilities on their part. Hence, you must understand what it entails.
This article explores all the basics of the “hire to fire” employment method currently utilized by many private companies and what to look out for.
What is hire to fire?
Hire to fire is a concept used in most workplaces today whereby employers hire employees just to let them go within a specified period.
Although the employment is considered a full-time job, a clause in the contract makes it possible for employers to terminate it quickly.
Some employers do this to meet certain work-related targets that require more hands-on involvement, while others do it for internal reasons (e.g., to meet a local employment quota).
For example, e-commerce giants like Amazon have been accused of using this method to meet their Unregretted Attrition quota (URA) or annual turnover target.
What is Unregretted Attrition?
This is a condition whereby employees who leave a company, either by resignation or termination, can no longer return to the company.
Reasons for termination can range from violating company policies to conduct violations or poor performance.
When this happens, the employee is entered into the company’s database as an Unregretted Attrition and can no longer gain employment there.
An easier way to explain Unregretted Attrition is the percentage of employees a company has no regret firing.
Why do employers hire to fire?
Employers hire to fire employees for numerous reasons such as needing more workforce to temporarily meet demands, meeting a set company quota for the number of employees hired annually, or getting desired candidates from a large pool of applicants.
Let’s take an in-depth look into some of these reasons.
1. Team protection
Some company managers annually have to rank the performance of team members to let go of their worst performers.
Even so, some continue to support their favorite staff due to their friendship. Hence, some managers would hire unqualified workers to fire later to make these team members appear experienced and defend their jobs.
2. Eliminating the weak and retaining the best
Some employers employ many employees to assess those who will adapt to the tasks faster and perform well.
Once they find their star candidates, they let go of the rest with excuses like “poor performance.” These employers generally use terms like “probationary period” or “apprenticeships.”
These kinds of recruitments can go as far as hiring 150 people and retaining just 2 each year.
3. Avoiding appraisal
Another reason employers hire to fire employees is to maximize their profit and minimize their expenses. Many managers prefer to hire and recycle new staff rather than promote hardworking employees.
By doing so, they limit the amount spent on wage increments and acquire labor that can quickly learn and do the job at a cheaper rate.
4. Hiring to meet demands
Some companies or factories hold massive recruitments to meet increasing demands during certain seasons like holidays.
Once the production quota has been met, they longer have a reason for retaining most of the new staff and must let them go.
Common excuses used in these circumstances include budget cuts or setting extremely high KPIs to weed them out.
Is it legal for employers to hire to fire?
Yes, it is within the confines of the law for employers to hire and let go of employees at will.
Your employer has the right to fire you for good or bad reasons. He or she needs no motive to do so and can exercise those rights as often as possible.
However, terminating an employee can only be done under the terms stipulated in the employment contract.
What are the disadvantages of hire-to-fire?
Common disadvantages of hiring to fire employees include a high turnover rate, distrust towards the organization by prospective employees, and a toxic workspace.
Hire-to-fire policies make it difficult for companies to attract top talent as most employees would rather not have a termination on their record.
Such practices make it difficult for promising employees to attend job interviews set up by that company. Such companies also witness a high turnover rate from employees who would rather resign than get their employment terminated.
When employees abruptly quit their jobs without giving due notice, company performance suffers as employers desperately try to fill that void.
Also, at-will employees who believe job retention at such companies is based on performance, become overly competitive and abandon teamwork. This leads to a highly competitive and toxic work environment.
Can companies fire newly hired employees?
Yes, a company reserves the right to terminate your employment if you’re not performing well or lack the skills to succeed.
If the company employs you using an at-will employment contract, you can be let go at any time. This is regardless of how good your performance was.
However, if a different contract is in place that prevents at-will termination, then a lawyer or the HR team needs to be consulted.
This is because wrongful termination exposes employers to lawsuits and entitles employees to settlements or unemployment benefits.
Employers can terminate at-will employees within a month of employment.
Reasons why companies fire newly recruited employees
Violations of company policies and budget cuts are the major reasons companies use as a motive to fire employees. These company violations are listed as follows;
- Disregard for safety
- Illicit drug use
- Alcohol use while on the job
- Sexual harassment
- Unethical behavior/Insubordination
- Misuse of company property or theft
- Poor performance
- Excessive absence
- Deception in the job application
How do hire to fire and at-will employment differ?
Hire-to-fire policies are the same as at-will employment. At-will employment means a company has the right to fire an employee without providing “just cause” or prior notice.
Such termination is permissible so long as it is not done for discriminatory reasons like sexual orientation, race, or religion.
Also, at-will employment strips employees of their right to demand compensation by claiming loss due to the termination.
Employees are also not entitled to any benefits in the event of their dismissal. However, such contracts also mean employees can quit their jobs without notice or reason.
Can you sue companies who hire to fire you?
Yes, if your employer wrongfully terminated you, you can sue them. However, you must establish whether your employer truly broke the law and validate your claim.
Hire to fire is the policy of which economy?
A capitalist economy operates on the “hire to fire” principle. Unlike in a mixed economy, where the government protects workers’ jobs, thus reducing employee turnover.
Who do you report to if you suspect being a victim of hire to fire?
As long as it was stated in your contract and you weren’t fired for discriminatory reasons like race, religion, or sexuality, you cannot report an at-will termination.
However, contact a lawyer if you suspect you were a victim of discriminatory termination or a breach of your contract.
While the hire to fire practice used by private companies is undesirable, there are very few actions employees can take against it.
Not only do you work with the fear of losing your job at any moment, but you’re also not eligible for employment insurance benefits.
Nevertheless, there are still some measures to safeguard oneself against harmful employment behaviors. Always read the employment contract carefully before signing it to ensure you are comfortable with its terms.
You can also research online and interact with previous or present employees to understand the type of work environment you’re going into. With such practices, there are bound to be disgruntled ex-employees.
Finally, do your due diligence in understanding the terms and conditions of a stable job. Here’s all you need to know about stable jobs, their benefits, and some examples of stable jobs.
I hope you found this article helpful.
Thanks for reading.