After first announcing it in March 2022, the Government has published the draft Code of Practice on dismissal and re-engagement, cracking down on unscrupulous methods of altering employment terms. A consultation on the draft Code is now underway and will run until 18th April 2023.
The practice of 'fire and rehire' as it is known, involves an employer terminating a contract with an employee and then offering them a new contract often with less favourable terms and conditions.
Officially called the Draft Code of Practice on Dismissal and Re-engagement, the document was published on the 24th January by the Department for Business, Energy and Industrial Strategy. As it stands, the Government are consulting on the draft code, and following this, all submissions will be analysed and views taken into account, before publishing a government response and final version of the Code.
The code sets out the responsibilities of employers when they are looking to change an employee’s terms and conditions, and it emphasises the importance of consulting with both employee representatives or trade unions.
The new code clearly states that employers cannot use threats of dismissal as leverage when trying to negotiate on new contractual terms. Instead, it states that the process of negotiating new contractual terms should be fair and transparent. It does make clear that dismissal and re-engagement may be used as a last resort and with legitimate business reasons.
The code does not create any legal obligations for employers, nor does it leave employers legally liable if they fail to follow it. However, once in force, it will give courts and employment tribunals the ability to take fire and rehire code into account when considering claims by employees. It will also give them the power to apply a 25% uplift to an employee’s compensation if the employer is found to have not followed the code.
Grant Shapps, business secretary, said: “Using fire and rehire as a negotiation tactic is a quick-fire way to damage your reputation as a business. Our new code will crack down on firms mistreating employees and set out how they should behave when changing an employee’s contract. We are determined to do all we can to protect and enhance workers’ rights across the country.”
On the other side, some leaders have voiced concern that the new code doesn’t go far enough. Deputy leader of the labour party Angela Rayner stated that: “This [fire and rehire] code isn’t worth the paper it’s written on. It’s shameful that nearly a year after the P&O Ferries scandal the Conservatives can only offer this weak half-measure, which they admit will allow fire and rehire tactics to continue. If the Conservatives want to protect workers, they’d finally bring in the employment bill they promised but have abandoned…The next Labour government will end fire and rehire, with our new deal for working people, legislating within our first hundred days in office.”
If you are an employer considering making changes to employment contracts, or dismissing employees, you should seek advice from an employment law expert to ensure that all processes are being followed according to the law.