Government consults on fire and rehire code of practice

The Government has published a draft code of practice on dismissal and re-engagement (or “fire and rehire”). This is part of the Government’s response to the mass dismissals at P&O Ferries last year, and will supplement ACAS guidance, which was first published in 2021.

The Government explains the purpose of the Code in the accompanying consultation document:

We are publishing a new draft Statutory Code of Practice, which will clarify and give some legal force to accepted standards about how employers should behave when seeking to change employees’ terms and conditions. It is important we take this further step to ensure that employers and employees are better equipped to manage change in a more balanced and collaborative way.

The draft Code sets out a process that employers should follow when seeking to agree changes to terms and conditions, making it clear that imposing such changes should be seen as a “last resort”. As with other statutory codes of practice, an employer’s failure to comply will give employment tribunals power to apply an uplift of up to 25% to compensation in relevant employment tribunal proceedings.

The Code would not supplant (though it may supplement) existing legal requirements that are engaged in a fire and rehire situation, notably the collective consultation requirements in the Trade Union and Labour Relations (Consolidation) Act 1992. Nor would it apply where the employees concerned are dismissed because of redundancy, as defined in the Employment Rights Act 1996.

It follows that the Code is likely to be most relevant where there is no redundancy situation, but the numbers involved would be too small to trigger collective consultation requirements. The consultation document makes it clear that the Code would apply not only where existing employees are to be offered the new terms, but also if an employer plans to bring in new employees in their place.

In some respects, the requirements of the Code go further than the existing collective consultation requirements which apply where an employer is proposing changes to terms and conditions. It is notable that the Code expects employers to continue to engage with staff about the changes even after new terms have been agreed. It also expects employers to provide practical support (for example by phasing changes or extending the notice period) when new terms are to be imposed by dismissal and re-engagement. However, claims for protective awards are not currently included in the list of jurisdictions where an employment tribunal would have power to uplift compensation for breach of the Code, so it is questionable what teeth it would have in these circumstances.

The consultation on the draft Code closes on 18 April. The final Code will need to be laid before Parliament before it takes effect. We do not yet know when that will happen.

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