The hangover of fire and rehire

Despite expectations that Labour would not bring the statutory code of practice on dismissal and re-engagement (Code of Practice) into force, pending legislation to ban ‘fire and rehire’, it did, in fact, come into force on 18 July 2024.

In a Ministerial Statement, Jonathan Reynolds MP, Secretary of State for Business and Trade, confirmed that:

“…we have decided not to prevent the previous government’s Code of Practice from coming into force today. While the Code is an inadequate measure to deal with fire and rehire, it will at least provide a small additional level of protection for workers while we bring forward legislation to implement our commitments on fire and rehire in our Plan to Make Work Pay”.

Implications for your business

The Code of Practice has been introduced to encourage employers to behave fairly and reasonably when seeking to change employees’ terms and conditions and engage in meaningful consultation with affected employees to reach an agreed-upon outcome. 

Key requirements of the Code of Practice are that employers should:

• Only use ‘Fire and Rehire’ as a last resort.
• Consult with employees and explore alternative options.
• Re-examine the proposed changes if they are not agreed upon, considering feedback from employees and their representatives.
• Not raise the prospect of dismissal unreasonably early.
• Not use threats of dismissal as a negotiation tactic to coerce employees into signing new terms and conditions where dismissal is not envisaged.

Consequences for your business

The Code of Practice must be considered in any tribunal proceedings in which it appears relevant.

If an employee brings certain employment tribunal claims (which includes unfair dismissal claims), and the claim concerns a matter to which the Code of Practice applies, the tribunal will be entitled to increase any award it makes by up to 25% for an employer’s unreasonable failure to comply with the Code of Practice or reduce any award by up to 25% for an employee’s unreasonably failure to comply with the Code of Practice.

The uplift does not apply to protective awards for failure to inform and consult in collective redundancy situations, as the relevant legislation was not brought into force before the General Election.

Comment

As an employer, you should familiarise yourself with the requirements of the Code of Practice at an early stage when considering making changes to terms and conditions of employment, which could lead to the dismissal of one or more employees.

Whilst the Code of Practice reflects the current position, we can expect further changes in this area in the coming months.  Watch the space…

For more information about this article or any other aspect of people services reimagined, download our App for Apple or Android, and contact your integrated HR, employment law and health & safety team at AfterAthena today.