The Government has now published its response to the consultation on the draft statutory Code of Practice on Dismissal and Re-engagement – known as ‘Fire and Rehire’. An updated draft Code has been presented to Parliament for approval.

Background

In March 2022, the Government responded to public concern over the use of ‘fire and rehire’ practices to bring about changes to employees’ terms and conditions, that would introduce a statutory Code of Practice on Dismissal and Re-engagement.

In January 2023 the Government launched a consultation on a draft Code aimed at providing practical guidance for the purpose of promoting the improvement of industrial relations where an employer is considering making changes to one or more of its employees’ contracts of employment and where it envisages that it might opt for dismissal and re-engagement if the employee does not agree.

This consultation closed on 18 April 2023 and the Government has now published its response, as well as an amended draft Code.

The Code sets out how Employers should act when seeking to change employment terms and conditions if it envisages dismissal and re-engagement.

Changes to draft Code

None of the key provisions from the original draft Code has been altered, however, a number of changes to the draft Code have been made:

• A paragraph on contacting Acas has been strengthened so that employers should be contacting Acas before they raise ‘fire and rehire’ with the workforce.
• The Code has been amended to state that it is good practice for employers to give information in writing.
• The Code will not apply where an employer is only envisaging making employees redundant, however, it will apply where both redundancy and fire and rehire are being considered as options. The Code will apply for as long as dismissal and re-engagement remain an option.
• Unlike the minimum time period of consultation as exists for collective redundancy, the only requirement to consult set out in the Code is ‘for as long as reasonably possible’.
• Threats of dismissal must not be used by employers to force employees into signing new terms and conditions.
• Alternatives to fire and rehire will need to be explored by employers. Employers will need to have meaningful discussions with employees and trade unions focused on reaching an agreement.
• Dismissal should not be threatened by employers, if it is not actually envisaged.
• Fire and rehire should only be used as a last resort.

It is worth bearing in mind that there is no stand-alone claim for failure to follow the Code, however, tribunals can take this into account in relevant cases, such as unfair dismissal. If an employer unreasonably fails to follow the Code, then the Tribunal will have the ability to uplift compensation by up to 25%.

The Code of Practice now awaits parliamentary approval.

For support and guidance on navigating the changes to the Draft Code of Practice, please get in touch with Rajveer Basra at Rajveerbasra@schofieldsweeney.co.uk