Government updates code of practice on ‘Fire and Rehire’

Employment Solicitor, Lauren Ogden, discusses new updates on the code of practice for fire and rehire.

Following the public concern over the use of ‘fire and rehire’ practices to alter employees’ terms and conditions used by P&O Ferries in March 2022, the government announced it would introduce a statutory Code of Practice on Dismissal and Re-engagement. We discussed the reasons for this change and what it would entail here.

The government launched a consultation on the draft code in January 2023 which ran until April 2023 and the government has now published its response alongside an amended draft code and explanatory memorandum. These have been presented to Parliament for approval and if approved, then a commencement order will bring the code into effect. This is likely to be later in the year.

The code sets out how employers should act when trying to change employees’ terms and conditions and that dismissal and re-engagement should only be used as a last resort. Employers will be required to consult with employees and explore alternative options to dismissal without using the threat of dismissal to put pressure on employees.

In response to the views expressed during the consultation, the Government have made changes to the draft code and the key points to consider are as follows:

• Employers are now required to contact ACAS at an early stage before raising the issue of fire and rehire with the employees which is a change from the previous draft that only required employers to contact ACAS if they had not reached an agreement with the employees.
• The code now states it is good practice for employers to give the information to employees in writing.
• The code does not apply in redundancy situations but will apply if both redundancy and fire and rehire are considered as options. It will apply for as long as fire and rehire remains an option.
• Employers are required to consult with employees “for as long as reasonably possible” although there is no minimum period of consultation.
• Employers cannot use the threat of dismissal to pressure employees into accepting new terms and conditions.
• As dismissal should only be used as a last resort, employers need to explore alternatives and meaningfully consult with the employees or trade union representatives.
• Employers should not threaten dismissal if it is not actually an option.
• More generally, the code has been updated to be less technical and more accessible for employers.

Failure to follow the code will not be a standalone claim for employees but if an employee brings a claim in the tribunal to which the code should have applied (including unfair dismissal), the tribunal will be entitled to increase any award by up to 25% if the employer has failed to follow the code. The tribunal can also reduce any compensation by up to 25% if the employee has unreasonably failed to comply with the code.

For more information on this, please get in touch with a member of the Employment Team today through info@kuits.com.