New Code of Practice on fire and rehire
New Code of Practice. Following the March 2022 actions of P&O Ferries in dismissing 800 workers without consultation, the government has announced that there’s to be a new statutory Code of Practice on fire and rehire (see Follow up ). Fire and rehire occurs when an employer dismisses employees and then offers to re-hire them on revised employment terms in order to bring about forced changes to their employment contracts. The new Code will set out how employers must hold “fair, transparent and meaningful consultations” on proposed changes to employment terms, and it will cover the practical steps that they should follow.
Pro advice. It’s possible Acas will be tasked to draft the new Code based on the content of their current non-statutory guidance (see Follow up ).
Penalty for breach. As the Code is to be statutory, employment tribunals and courts will be able to take it into account when deciding relevant cases, such as for unfair dismissal. Tribunals will then have the power to apply an uplift of up to 25% to an employee’s compensation award if their claim is successful and the employer unreasonably failed to comply with any provision of the Code , where it applies. However, a failure to follow it will not, of itself, make an employer liable to proceedings, i.e. employees won’t be able to bring free-standing claims for breach.
Pro advice. This is very similar to how the statutory Acas Code of Practice on Disciplinary and Grievance Procedures operates (although in that case the employee’s compensation can either be increased or reduced by up to 25%, depending on which party unreasonably failed to follow its provisions).
Pro advice. This doesn’t mean the practice of fire and rehire is being outlawed, as no new legislation is proposed. Rather, the Code will explain existing legal obligations, e.g. that employers must act fairly and reasonably when seeking to change employment contracts through dismissal and re-employment. It is, however, likely to result in an increase in unfair dismissal claims relating to fire and rehire, particularly where there’s been a lack of meaningful consultation or where fire and rehire has been threatened as a negotiation tactic.
Government press release
Making changes to employment contracts: Acas guidance
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