Is there a new Government statutory code on fire and re-hire practices in the workplace?

27 January 2023 | Jatinder Tara

“Fire and rehire" is a process by which employers can change the terms and conditions of their employee’s employment contract by dismissing the employees who do not agree to the changes after meaningful consultations and then rehiring them on revised terms and conditions. 

Our news article published on 25th October 2022 provides further guidance on the above but this month there have been further developments on the matter as The Department of Business, Energy and Industrial Strategy has published a draft a statutory code of practice on dismissal and re-engagement, under Section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) (2), with consultation on the draft ending in April 2023 and subject to any further amendments it will be put to parliament to make it a statutory provision.

What is the Government viewpoint on fire and rehiring?

The government has stated, “The government has been clear that threats of dismissal and re-engagement should not be used as a negotiation tactic. Dismissal and re-engagement should only be considered as an absolute last resort. We expect all employers to engage meaningfully with their workforces and representatives, whilst considering all available options” thus a draft statutory code on dismissal and re-engagement has been introduced by the Government for consultation before it becomes law to clarify how employers should behave when looking to change employee’s terms and conditions of employment so as to remove any bad practices.

The Government has highlighted that the aim of the new statutory code would be to promote good industrial relations by providing practical guidance on how to manage the conflict which can arise when an employer wants to make changes to contractual terms, in circumstances where employees are not willing to accept these changes.

What are the consequences on the noncompliance on the code?

Although the Government have emphasised that the Code does not impose any legal obligations, thus a failure to adhere to the code does not render anyone liable to proceedings but the code will be admissible as evidence in any court or tribunal proceedings for the provisions of the code to be considered by the court or tribunal.

Furthermore, “where an employee brings one of the employment tribunal claims listed in Schedule A2 to the 1992 Act and the claim concerns a matter to which this code applies, then the tribunal can:

  • increase any award it makes by up to 25%, if the employer has unreasonably failed to

comply with the Code; or

  • decrease any award by up to 25%, where it is the employee who has unreasonably failed to comply”

What should employers do?

Bearing in mind the importance placed by the government on ensuring that fire and rehire is carried out fairly with the likelihood of the draft code becoming a statutory provision (subject to any amendments to the current draft code), it is prudent for employers to take professional HR advice when looking to proceed with a fire and rehire process.

The article is for informational and educational purposes only and should not be relied upon as legal advice. If you require any further assistance, please do not hesitate to contact our free advice line team at 0116 274 9193.

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