Written by JMW Solicitors LLP
The Government has published an updated draft Code of Practice on Dismissal and Re-engagement, more commonly known as ‘Fire and Rehire’. The Code was initially drafted by the Government back in January 2023, however, following a public consultation, some small changes have been made.
What is ‘Fire and Rehire’?
The use of ‘Fire and Rehire’ or ‘Dismissal and Re-engagement’ involves employers terminating the contracts of existing employees and subsequently offering them a new and often less favourable one. Currently, it is not illegal to dismiss and re-engage, however strict consultation processes must be followed, especially in relation to collective redundancies.
In November 2021, guidance was published by ACAS making it clear that the practice of fire and rehire should only be used as a last resort, only after all reasonable attempts to reach an agreement have been made.
In March 2022, the topic of fire and rehire garnered considerable interest after P&O Ferries controversially dismissed nearly 800 of its employees “on grounds of redundancy” and sought to hire only agency workers moving forwards in an attempt to reduce costs. This consequently sparked wider debate about the legality of fire and rehire practices and following other high-profile cases involving British Gas and British Airways, the Government announced its intention to draft a new statutory code to crack down on the use of such practices.
What does the draft Code propose?
There are a number of key provisions which the Code proposes to introduce. It is important to note that the Code will not apply to redundancy situations, however, will apply to situations where an employer considers both redundancy and fire and rehire as options in the circumstances. The provisions, which will continue to apply for as long as the employer considers the use of fire and rehire, are as follows:
- Fire and rehire should only be used as a last resort and employers must explore alternative to the use of this practice. This involves having meaningful discussions with employees and trade unions in order to try and come to an agreement;
- Employers should contact ACAS at an early stage before attempting to use fire and rehire tactics. This has been amended from the previous provisions which required employers to contact ACAS in the event they were unable to reach an agreement with employees;
- The Code requires that employers consult with employees ‘for as long as reasonably possible’, however there is no minimum as to the time period for consultation;
- Threats of dismissal should not be used by employers to compel employees into agreeing to new terms and conditions;
- Employers should give information to employees in writing to promote good practice;
There are no legally binding obligations imposed on employers by the Code, however, where an employer unreasonably fails to follow this, Employment Tribunals may take this into account and will have the ability to award uplift of up to 25% to compensation in relevant cases.
If the Code is approved by Parliament, the Code could subsequently be brought into effect by way of a commencement order later this year.
This article is for general guidance only and should not be used for any other purpose. It does not constitute and should not be relied upon as legal advice.
If you would like to discuss this article or any recruitment issue in more detail, please contact Simon Bloch of JMW Solicitors LLP either by email at simon.bloch@jmw.co.uk or by telephone on 0161 838 2628.
