Rehire Policy After Termination

Sometimes, employees who leave a company later decide they want to come back and work for their former employer again. Companies and organizations have to decide whether to rehire these former employees. These are complicated decisions with potential legal implications.

Employers need to carefully consider their rehire policy after termination. After they formulate a policy, they should put it in writing. This document will provide guidance to Human Resources departments and the hiring managers who make the final decisions. The policy helps ensure decisions are made consistently and that no important considerations are overlooked.

One important consideration is why a former employee was terminated. Causes of employee turnover vary, and that turnover can be costly to the company. For rehiring decisions, it matters if the employee left voluntarily, was laid off, or was fired for misconduct or poor performance. A rehire policy creates a consistent process for deciding which employees are eligible for rehire.

This article will explain the basics of what the professionals in an HR department need to know when implementing a rehire policy for former employees.

Benefits of rehiring following employee termination

Rehiring formerly terminated employees may provide several benefits for employers. The rehired employees:

• Save the company money because they’ll need less training and onboarding than a new hire would.
• May bring valuable new skills with them that they learned during their time away.
• Are a known quantity and may present less of a risk than a new hire.
• Could have a positive impact on the company culture.

Implementing an effective rehire policy

A formal rehire policy helps ensure that hiring managers base their decisions on clear and objective criteria. The policy should provide a uniform process for determining when an employee is eligible to be rehired at the same company. There may be legal considerations when rehiring. Having a policy in place will help protect employers from potential claims of discrimination if the company decides not to rehire an employee.

A rehire policy should address who is eligible for rehire and how to handle employee seniority, salary, and benefits.

Who will be eligible and ineligible for rehire?

A former employee has the legal right to apply to be rehired for a new job or previous job with a former employer. The company should outline which applicants it will consider.

For example, the company could specify that to be eligible to be rehired, a former employee:

• Was laid off vs. fired or, if they left voluntarily, gave timely notice.
• Had satisfactory performance reviews.
• Can pass a drug screening and background check according to the company’s current procedures.

The company should also create a “no rehire list” of criteria that make an employee ineligible to be rehired. Employees terminated for cause might still request rehire, but the policy should make the reasons they won’t be considered clear. For example, an employee could be strictly ineligible for rehire if they were terminated because they:

• Committed a crime against the employer or another employee.
• Violated important company policies.
• Demonstrated ongoing performance issues, such as poor performance or failing to perform their job adequately.

When outlining ineligibility details, remain professional and non-accusatory in attitude and tone. Simply state the facts.

Employee status and benefits

Rehired employees may have certain legal rights to benefits, such as accrued sick leave. These vary by jurisdiction, so you’ll need to take federal, state, and city laws into consideration.

Do you have to restore salaries?

If you had an employment contract or collective bargaining agreement with the employee, it may contain salary requirements you need to follow. Otherwise, there may be no legal obligation to match or exceed an employee’s former salary from previous employment.

However, many employers voluntarily give rehired employees credit for prior service for seniority-based pay and benefits. Even when they’re not legally required to do so.

If your company decision makers plan to do this, determine clear and consistent rules for when rehired employees are eligible for prior service credit and/or restored salaries. Include these rules in your rehire policy document.

For example, the company policy for rehiring terminated employees might specify that:

1. Employees who are rehired within a year after termination are eligible for:
   1. The same salary they received before, if they are rehired for their old job.
   2. The salary that other employees in their job category are making, if they are rehired for a different job that pays less or more than their previous position.
2. Employees who are rehired more than a year after their terminations are treated as new hires.

What happens to benefits when you bring employees back?

Some rehired employees will have legal rights to certain benefits. This will depend on the jurisdiction and the reason for termination.

For example:

• Some local jurisdictions may require that employees who are rehired within a certain time period have their accrued sick leave time restored.
• Hours worked before termination may be applied toward the hours needed to be eligible for leave under the federal Family and Medical Leave Act.
• Furloughed employees may retain benefits.
• With some exceptions, laid-off employees who are rehired may be treated as new hires.

Employers may choose to provide more benefits than are legally required. If you do this, be sure to document it as part of your rehire policy to ensure fairness and consistency. Employers may choose to offer different levels of seniority and benefits depending on how long it’s been since the rehired employee left the company.

How can employers incentivize employees making more on unemployment?

Employers may need to offer special incentives to entice former employees to return. These could include:

• Bonuses.
• Enhanced long-term benefits.
• More flexible and remote-work options.
• Other types of compensation of a monetary and/or non-monetary incentive nature.

Many employers work their rehire policy into their overall layoff strategy and make it known when communicating layoffs to employees.

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