The Government has published an updated code of practice on dismissal and re-engagement, otherwise known as “fire and rehire”; a controversial practice where an employer fires an employee and offers them a new contract of employment, often on less favourable terms.The new code of practice aims to tackle the use of this practice as a negotiation tactic to pressurise employees, and sets out what employers must do in this situation. It is currently in draft form but, if approved by Parliament, is likely to come into effect later this year.
The updated code of practice follows the Government’s consultation on fire and rehire practices and a previous version of the draft code, which ran from January to April 2023.It explains how employers must behave when they are seeking to change an employee’s terms and conditions of employment and are considering dismissal and re-engagement if the employee does not agree to the change.
Some of the key points set out in the updated code of practice are:
An employer’s failure to follow the code of practice will not give rise to a standalone claim. However, if an employee successfully brings another relevant claim (such as for unfair dismissal) and an employer has unreasonably failed to follow the code of practice, an Employment Tribunal could uplift the compensation awarded by up to 25%.
Matthew Potter comments “The new code of practice seeks to emphasise the importance of trying to agree contractual changes before raising the prospect of firing and rehiring, and avoiding using this as a bargaining chip. If approved by Parliament, employers will need to understand their obligations under the new code of practice and the process which must be followed. Otherwise, they will risk seriously damaging working relationships and leave themselves open to paying heftier compensation awards where an employee successfully brings a relevant Employment Tribunal claim.”
If you have any questions about the new draft code of practice, or need assistance with changing terms and conditions of employment, please contact a member of the team here.
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