Fire and re-hire: Code of Practice will soon be in force

The background to this topic can be found in our earlier update here. Back in March 2022, the Government announced that it would introduce a statutory Code of Practice on Dismissal and Re-engagement (also known as “fire and re-hire”). This was in response to concern over the use of such practices to bring about changes to employees’ terms and conditions of employment, as highlighted by the mass dismissals of P&O Ferries employees earlier that year.

Consultation on a draft Code ran from January 2023 to April 2023 and the response has just been published along with an amended version of the draft Code, which can be found here.

In summary, the draft Code:

• sets out how employers should act when seeking to change employment terms and conditions if dismissal and re-engagement is envisaged;
• requires employers to consult with employees “for as long as reasonably possible” and to explore alternative options;
• requires employers to contact Acas for advice before raising the prospect of dismissal and re-engagement with employees; and
• seeks to ensure that employers do not raise the prospect of dismissal unreasonably early, or put undue pressure on employees by threatening dismissal where this is not, in fact, envisaged;

The draft Code will apply regardless of the number of employees affected (or potentially affected) by the employer’s proposals, and regardless of the employer’s reasons for seeking changes to its employees’ terms and conditions.

Note that the Code does not apply where an employer is only envisaging making employees redundant. However, where an employer is envisaging both redundancy and dismissal and re-engagement in respect of the same employees, the Code will apply for as long as dismissal and re-engagement remains an option.

There is no stand-alone claim for a failure to follow the Code. However, the Code can be taken into account by a Court or Tribunal in relevant cases (including unfair dismissal). A Tribunal will have the ability to increase any award by up to 25% if an employer unreasonably fails to follow the Code or to reduce any award by 25% if an employee has unreasonably failed to comply.

The final version of the Code will be brought into force once approved by Parliament, which should be “later in the summer”, according to the Government press release.

If you have any questions on fire and re-hire practices, please get in touch with a member of our Employment team.