“Fire and Rehire” Code of Practice

A statutory code on the practice of ‘fire and rehire’ will clamp down on controversial tactics used by employers who fail to engage in meaningful consultations with employees.

The Government has come under increasing amounts of pressure to legislate on the practices of employers firing and rehiring staff members in order to push through changes to terms and conditions. In the light of recent events surrounding the collective redundancies and dismissals of P&O ferries’ staff, the Government has now announced that it will publish a Statutory Code of Practice.

As recently as February 2022, the Government had said that it would not legislate on fire and rehire practices. However, the Government did launch an investigation with ACAS and asked ACAS to produce guidance to assist employers and encourage good employment practices, including considering alternatives before firing and rehiring staff members. Guidance was published by ACAS in November 2021, which outlines that employers should fully consult with staff members about proposed contractual changes and try to reach agreement on any changes. The guidance states that fire and rehire is extreme and affects staff morale and trust and should only be used as a last resort. The current guidance from ACAS has no statutory force.

The new proposed Code of Practice, when published, will outline how businesses should carry out fair and transparent consultations with staff and will include practical steps for employers to follow. Tribunals will be required to take the code into account when considering cases, such as those for unfair dismissal, and will have the power to apply an uplift of up to 25% of any compensation awarded to the employee, if the employer fails to follow the code. This is much the same as the Tribunal’s current right to do so for a failure to follow the code relating to disciplinary procedures.

It is not clear when the Code of Practice will be published however employers should be mindful of the Government plans on this matter and should follow fair and meaningful consultations with staff on any proposed changes to terms with fire and rehire being the last resort.

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