Updated Code of Practice on ‘Fire and Rehire’
The Government has published an updated Code of Practice (the Code) on dismissal and re-engagement (otherwise known as ‘Fire and Rehire’). It is likely to come into effect this summer (once it is approved by Parliament).
It is much the same as the original draft Code published in January 2023 (see our Newsletter 2023 Issue 1). However, there have been some minor changes following the Government’s consultation on this last year.
Key points to note include:
- Employers must consult with the employee for as long as reasonably possible (although there is no minimum time period for the consultation process).
- The consultation must explore any alternatives to firing and rehiring, and should be meaningful and with a view to reaching an agreement.
- The threat of dismissal must not be used a negotiation tactic to pressurise employees into accepting the new terms, or where dismissal is not actually being envisaged.
- Firing and rehiring should only be used as a last resort.
- Employers should contact ACAS for advice before raising the prospect of firing and rehiring with their employees (although ACAS can be contacted wherever the Code applies).
- Employers must provide employees (or their representatives) with ‘as much information regarding the proposals as reasonably possible’ and ‘as early as reasonably possible’ so that the employees/representatives can engage in ‘meaningful’ consultation. The Code states that it is ‘good practice’ for that information to be provided in writing.
- If it becomes clear that the employees (or some of them) do not agree with some or all of the changes, then the employer must re-examine its proposals, taking into account any feedback received from employees (or representatives). However, it does not need to re-examine its business strategy (updated from the consultation Code).
- Phasing in changes proposed by an employer is now a recommendation made by the Code, rather than a requirement.
- The Code will apply regardless of the number of employees potentially affected by the proposals, or of the employer’s reasons for seeking to change the terms and conditions of employment
- The Code will not apply where an employer is only envisaging making employees redundant. However, it will apply where an employer is considering both redundancy or firing and rehiring as potential options for the same employees.
- Ultimately new terms may be imposed by an employer, even if not agreed by the employees. However, the Code stresses the potential downsides of unilaterally imposing terms and conditions, including possible unfair dismissal and discrimination claims.
An employer’s failure to follow the Code will not give rise to a standalone claim. However, if an employee successfully brings another relevant claim (such as for unfair dismissal) and an employer has unreasonably failed to follow the Code, a Tribunal could uplift the compensation awarded by up to 25%.
