Code of Practice on “Fire and Rehire” practices
The practice of “fire and rehire” has sparked considerable controversy in recent years, especially for employers using such practices to change employees’ terms and conditions, often for the employer’s own benefit. This practice has become a focal point for discussions about worker’s rights.
The Government announced in March 2022 that it would introduce a new statutory Code of Practice on Dismissal and Re-engagement with a consultation commencing in January 2023. The Government has now published its response to the consultation along with a draft Code which has been put before Parliament for their approval.
What does the Code say?
The Code is designed to provide guidance and set standards for employers who are considering dismissing and re-engaging employees on new terms. The Code sets out guidance on:
- How employers should act when seeking to change terms. This includes the need to contact ACAS if agreement cannot be reached with employees about dismissal and re-engagement. ACAS should be contacted at an early stage and even before an employer raises dismissal as an option with workers.
- How employers must consult employees and explore alternative options to dismissal and re-engagement. Employers should not threaten dismissal and re-engagement unreasonably early in the process as a tactic to put pressure on employees. There is a requirement in the Code for employers to consult employees for “as long as is reasonably possible” but specific time period is imposed.
- How the practice of dismissal and re-engagement should be used only as a last resort.
The Code will apply to all instances of dismissal and re-engagement regardless of the number of employees affected by proposed changes. It also applies regardless of their employer’s reasons in seeking to change terms and conditions.
The Code does not apply in redundancy situations but will apply if dismissal and re-engagement is being considered alongside redundancy.
What happens when the Code is introduced?
If the Code is approved by Parliament, then it will come into force later this year. There is no claim for a failure to follow the Code in itself. However, tribunals will be able to take into account compliance with the Code in relevant cases. If an employer is found to have breached provisions of the Code, then tribunals will have the power to uplift compensation awarded by up to 25%. Tribunals will also be able to reduce any award by up to 25% where it is the employee who has unreasonably failed to comply with the Code.
Conclusion
The introduction of the Code is an important development in the protection of worker’s rights in the UK. Its effectiveness will depend on how it is adopted in practice by various businesses.
Employers should be aware of the Code and adhere to this, much like they do for disciplinary and grievance procedures. While many employers will argue that dismissal and re-engagement is necessary for business viability, it is clearly the Government’s plan to enhance worker’s rights surrounding this practice as far as possible.
For more information on the above please contact Gina McCadden, solicitor in our employment team.
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