The government has published its draft Code of Practice on Dismissal and Re-engagement to stop employers using the practice of ‘fire and rehire’ when seeking to make changes to terms.

Changing the terms and conditions of employment require the employer to consult with their employees. The contract of employment is a legally binding agreement between employers and employees. The employer should not unilaterally make changes to it. The employer must engage in meaningful consultations with the workforce by sharing information with employees and their representatives to help them understand the proposed changes.

Engaging with your employees is very beneficial to organisations. It makes your employees feel involved, respected and heard. The consultation should address the nature of the proposals, who will be affected, why the changes are necessary, timeframe and options you have already considered.

Meaningful consultations with individual employees and their representatives will often lead to a resolution. Dismissal and re-engagement should be used as a last resort. However, some employers and employment advisers often use these as the primary tool to make changes to their employment contracts. Where collective consultation is appropriate, the employer must consult with existing trade unions or employee representatives. If there are no elected representatives, the employer should consider facilitating the election of representatives for the purposes of the consultation.

On Tuesday, 24th January 2023, the government launched a consultation on its draft Code of Practice on Dismissal and Re-engagement. The consultation will take place over a 12 week period.

The proposed code of conduct is to stop employers that use the practice of ‘fire and rehire’ as a tactic when seeking to make changes to terms and conditions. Employers dismiss an employee and issue them a new contract on revised and often less favourable terms. The Code sets out employers’ responsibilities when employers seek to impose changes to the terms and conditions of employment.

The Code intends to set out good industrial practices.  It encourages a genuine and open process when proposing a change to the terms and conditions. It seeks to deter employers from using threats of dismissal during negotiations of new terms and conditions. Non-compliance with the Code will be taken into consideration in any unfair dismissal claim. Courts will have the power to apply a 25% uplift to an employee’s compensation in certain circumstances. Employment tribunals will also have the power to decrease any award by up to 25%, where it is the employee who has reasonably failed to comply.

The Code does not apply where the employee’s dismissal is genuinely redundant (as defined by Employment Rights Act 1996). In the circumstances covered by the Code, it makes references to the importance of the employer providing information to and consulting with employees or their representatives. It also includes recommendations for sharing information.

If the employer is seeking to impose multiple changes to terms, the Code recommends consideration for a phased introduction. It also includes the need to review the changes at a fixed point in the future, perhaps with a view that the original terms might be re-introduced if the original reason for changing the terms ceases to be relevant.

Consultation Period

The consultation will remain for 12 weeks, this is an opportunity for all interested individuals and groups to review the draft code, consider its provisions and provide their views on it.  The closing date is 18 April 2023.

Links:

Draft Code of Practice on Dismissal and Re-engagement

Consultation on the Draft Code of Practice on Dismissal and Re-engagement