Fire and Rehire: Updated Code of Practice and What It Means for Employers

The practice of “fire and rehire,” where employers dismiss staff only to re-engage them under different terms, has been under scrutiny for some time. To address this, the statutory Code of Practice on Dismissal and Re-engagement, commonly known as the Code of Practice on ‘fire and rehire,’ officially came into force on 18th July. Shortly after, on 30th July, the government issued a revised version of the Code to include a key sentence and make some textual adjustments.

What’s New in the Revised Code?

The re-issued Code now includes a critical sentence that was present in the draft laid before Parliament but omitted from the initially published version. This sentence, found in paragraph 52 under the section relating to the terms of re-hire, reads:

“The employer should ensure that the only terms which are changed are those which have been subject to the information-sharing and consultation process and should not use this as an opportunity to make any further changes.”

This addition emphasises the importance of transparency and fairness during the re-hire process, ensuring employers do not use ‘fire and rehire’ as a cover to introduce unrelated changes to employment terms. Besides this inclusion, the re-issued Code also features minor textual adjustments and amendments to headings, which do not alter the substantive provisions of the Code.

Key Aspects of the Code of Practice on Fire and Rehire

The Code, although not creating a standalone right for employees to bring claims solely based on its breach, is crucial because employment tribunals must consider it in relevant cases, including claims of unfair dismissal. Non-compliance can result in a tribunal increasing compensation by up to 25%, mirroring the approach taken with the Acas Code on Grievance and Disciplinary Procedures.

Some key provisions of the Code include:

• Last Resort Measure: ‘Fire and rehire’ should only be considered when all other options have been exhausted. Employers are encouraged to explore alternative solutions and genuinely engage in consultations with employees.
• Consultation Requirements: Employers are required to consult ‘for as long as reasonably possible’ regarding proposed changes. Unlike collective redundancy situations, there is no prescribed minimum consultation period. Employers are advised to contact Acas early in the process, before presenting ‘fire and rehire’ options to employees.
• Prohibition of Coercion: The Code makes it clear that employers must not use threats of dismissal as a tool to force employees into accepting new terms and conditions. Dismissal should not be threatened unless it is genuinely envisaged.
• Review and Phased Implementation: Employers might commit to reviewing the implemented changes at a future date to assess whether they are still necessary. Where multiple changes are proposed, a phased approach to implementation might be more appropriate.

What Should Employers Do?

With the Code now in force, it is crucial for employers to review their policies and practices concerning contractual changes and ensure they align with the new requirements. This is not only about compliance but also about maintaining trust and a positive relationship with employees. Here are steps employers should consider:

1. Review Employment Practices: Examine your current policies and ensure they comply with the new Code. Consider whether the practice of ‘fire and rehire’ is genuinely necessary and explore alternative solutions first.
2. Engage in Meaningful Consultation: Actively involve employees in discussions about any proposed changes. The consultation should be genuine, listening to feedback and exploring possible compromises.
3. Seek Advice Early: Contact Acas or legal experts early in the process to ensure that your approach aligns with the Code’s requirements and best practices.
4. Document Everything: Keep detailed records of consultations, discussions, and the rationale for any changes made. This documentation will be vital if a tribunal becomes involved.
5. Prepare for Potential Legislative Changes: Be aware that the current form of the Code may not be permanent. Labour has indicated intentions to legislate against ‘fire and rehire,’ potentially replacing and strengthening the existing Code.

Need Guidance?

Navigating the complexities of employment law can be challenging. If you need advice on how to implement or adapt to the fire and rehire Code of Practice, our team of employment law experts is here to help. We can provide tailored support to ensure your business remains compliant and that any contractual changes are handled fairly and legally.

Contact Us Today:

• Email: info@mylawsolicitors.co.uk
• Telephone: 01924 654194

Ensuring compliance not only protects your business from legal risks but also supports a fair and respectful workplace for all employees.