The government has launched a consultation on a new Code of Practice on dismissal and re-engagement otherwise known as “fire and rehire”. The consultation will run until 18 April 2023.
This is the result of a commitment to take action following the public outcry last year over P&O Ferries’ dismissal of 800 employees without warning so that they could be replaced with lower paid agency workers.
The Code of Practice is intended to provide practical guidance for employers who are seeking changes to employment contracts and envisage that, in the absence of employee consent, there is the prospect of dismissal and re-engagement of staff on new contractual terms.
The Code applies whether existing employees will be reengaged, or new employees brought on board to perform the same roles.
The Code also makes it clear that “firing and rehiring” should be a last resort option, after the relevant steps detailed in the Code have been taken, and if the employer’s objectives cannot be achieved in any other way.
Key aspects of the new draft Code include the following:
Employment tribunals will need to take the Code into account where relevant to any proceedings, such as unfair dismissal and/or discrimination claims.
If the employer has unreasonably failed to comply with the Code, a tribunal will be able to uplift any compensation award by up to 25%. This mirrors the current approach in relation to an unreasonable failure to follow the statutory ACAS Code on Disciplinary and Grievance Procedures.
The Code will apply alongside any other statutory information and consultation obligations which may be relevant to the situation. That might include, for example, any collective bargaining arrangements with trade unions, the TUPE Regulations, and/or the collective redundancy regime.
Although a collective redundancy process is required if there is a proposal to dismiss 20 or more employees at one establishment, the new Code will apply regardless of the number of employees involved in the “fire and rehire” process.
However, the Code will not apply where there is a genuine redundancy situation for the purposes of the definition in the Employment Rights Act 1996 (in other words, a particular role is no longer needed, or there is reduced need for a particular type of work, and the employee(s) are not being replaced).
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