Government Response to “FIRE AND REHIRE” Code of Practice
The Background
There was widespread public criticism and concern relating to the practice of “fire and rehire” which is used by employers to change employees terms and conditions. The practice is used to force through changes to contractual terms of employment. The criticism led to the Government responding in March 2022 stating it would issue a statutory Code of Practice on Dismissal and Re-engagement (the Code).
The Government then, in January 2023, launched a consultation on the new draft Code. This consultation aimed to provide practical guidance and advice in circumstances where employers are considering making changes to their employees contracts of employment, in circumstances where the employee does not agree, and the only option left for the employer would be to use dismissal and re-engagement to implement the changes.
This consultation closed in April 2023 and the Government has now published its response. A new amended draft Code has also been issued, along with an explanatory memorandum, which is being presented to Parliament to approve.
What does the new code set out?
The new draft Code sets out how employers should act and the procedures they should consider following when they are looking to change one or more terms of their employees contracts of employment by way of “fire and rehire”.
Regardless of the amount of employees or the number of terms being sought to change, employers need to consult with employees and alternative options need to be explored. Employers should not threaten dismissal as a negotiating tactic when it comes to consulting, especially when they have no intention of dismissing, and they should not raise the prospect of dismissal to employees unreasonably early in the process.
The practice of “fire and rehire” should be used as an absolute last resort. Employers are encouraged to consider all other options before resorting to this.
The Code clarifies that it does not apply to solely redundancy situations, however If an employer is considering redundancies and dismissal and re-engagement as options, the Code will apply as long as dismissal and re-engagement is still an option.
The Code pushes for employers to contact ACAS when considering using this practice for guidance. Employers should contact ACAS as early on in the procedure as possible, before raising dismissal and re-engagement with employees.
What is next?
If the code gets approval then we shall see it come into force by statute. This means in matters where the code will apply, the Tribunal will be able to increase or decrease awards by up to 25% when an employer or employee has not complied with the Code. The Code however, will not have a stand-alone claim for any failures by employers, it will only be relevant in conjunction with another claim being asserted.
Please do not hesitate to contact a member of our team if you are considering implementing changes in your employees contracts of employment, we are here to help you.
