Government announce a new statutory code to prevent unscrupulous employers from using fire and rehire tactics

In wake of the P&O sackings Paul Scully, Minister for Labour Markets, announced this week a new statutory code on the practice of ‘fire and rehire.’ the Government claims that the code will also crack down on dubious tactics used by unethical employers who fail to engage in meaningful employee consultations.

The practice of ‘fire and rehire’ refers to when an employer dismisses a worker and rehires them on new, less-favourable terms. The Institute of Employment Rights (IER) covered this practice in a report in response to a Labour Party consultation on how trade unions can be supported and workers protected from fire and rehire practices. In the report, the IER stated that:

“The practice reflects a systemic problem of British labour law caused by the legal restrictions on trade unions, inadequate statutory protection of workers, and a common law that empowers employers (in particular, the power to terminate the contract of employment on notice).”

The Government released a press release this week, including the announcement of the new statutory code, where they stated that “The new Statutory Code of Practice will detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms.” further adding:

“The code will include practical steps that employers should follow. A court or Employment Tribunal will take the code into account when considering relevant cases, including unfair dismissal. The courts will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code where it applies.”

Labour Markets Minister Paul Scully said:

“P&O Ferries’ actions were not a case of fire and rehire – just fire.

However, the way the company acted in not consulting employees before taking extreme measures was appalling. This has laid bare the measures some deceitful employers are prepared to take to exploit and break the law.

That is why we are producing a new code to tighten the screw on unscrupulous employers, who must comply with a new statutory code on tougher employment rules – including fire and rehire.

We expect companies to treat their employees fairly – and whilst the vast majority comply with the law – today we are going further to stand up for workers against those that flagrantly disregard it.

Fire and rehire tactics are often used when employers want to change the terms and conditions of their workers. This can take place when a company is in financial distress and needs to cut costs to stay in business.”

TUC general secretary Frances O’Grady said the plans “lack bite”, adding:

“While a statutory code is a baby step forward, it won’t deter rogue employers like P&O from trampling over workers’ rights.

It’s time for Ministers to finally deliver on their manifesto promise to beef up protections at work – that means delivering an employment bill to stop bad bosses who think they can fire at will.”

The Institute of Employment Rights described the measures as “not the full menu” and noted the absence of a draft code, or a date for implementation. Ben Sellers, the Director of the IER said:

“To properly deal with both ‘fire and rehire’ and the specific situation around P&O Ferries, the Government will need to do a lot more than tinker around the edges. Holding out the possibility of higher compensation pay-outs are one thing, but what is really necessary is the fundamental restructuring of the law, along the lines of Barry Gardiner’s Employment and Trade Union Rights (Dismissal and Re-engagement) Bill, which was of course, blocked by Ministers in October last year.”