Fire and rehire – Government response to consultation on the draft statutory Code of Practice on Dismissal and Re-engagement

The Government has released an updated draft Code of Practice on Dismissal and Re-engagement, along with an explanatory memorandum. Here are the important changes to be aware of…

Consultation on the draft statutory Code of Practice on Dismissal and Re-engagement

The Government launched a consultation on a draft Code in response to public concerns over ‘fire and rehire’ practices among employers. This is generally used when employers want to bring about changes to the employees’ terms and conditions. The code is intended to provide practical guidance where employers opt to dismiss and re-engage if they oppose to changes to their contract to improve industrial relations.

Government Response

The Government’s response has now been published, and the amended draft Code and explanatory memorandum are awaiting approval from Parliament.

The scope of the Code remains largely unchanged and will continue to apply to the employer’s proposals regardless of the number of affected, or potentially affected, employees.

The Code seeks to ensure that the threat of dismissal and ‘fire and rehire’ practises are only used as a last resort from employers, rather than a negotiation tactic. It requires employers to explore alternative options and properly consult employees rather than raising the prospect of dismissal prematurely.

The Code was amended to clarify that it will not apply to where there is a genuine redundancy situation. However, if the employer is considering both redundancy and dismissal and reengagement of the same employees, the Code will still apply so long as dismissal and re-engagement remains an option.

The need to contact ACAS has also been reinforced in the amendments. Employers must contact ACAS prior to raising the possibility of dismissal and re-engagement. This does not affect the general position that ACAS can be contacted wherever the code applies.

Failure to follow the Code

Failure to follow the Code is set out in the 1992 Trade Union and Labour Relations (Consolidation) Act. Breach will not, in itself, cause liability to proceedings, but it is admissible in evidence and will be taken into account in court, employment tribunal or Central Arbitration Committee proceedings. Further, if an employee brings an employment tribunal claim listed in Schedule A2 to the 1992 Act, the tribunal may impose a 25% uplift to any award if the employer has unreasonably failed to comply with the Code. They may also reduce any award by up to 25% where it is the employee who has unreasonably failed to comply.

Comment

The draft Code will be brought into force by way of a commencement subject to Parliament’s approval, this is one for employers to watch…

For any further guidance or assistance, please get in touch with a member of the Employment Team who will be happy to help.