Government issue draft code of practice on dismissal and re-engagement

The Government have issued a draft code of practice relating to ‘dismissal and re-engagement’ (or fire and rehire as it has become known. The draft code can be accessed here.

The new statutory code of practice will give employment tribunals will have the power to apply an uplift of up to 25 percent of an employee’s compensation if an employer unreasonably fails to comply with the code. The Government claim that the new code will protects workers’ rights whilst “respecting business flexibility”.

Business Minister Kevin Hollinrake said:

“Our new Code will crack down on employers mistreating employees and sets out how they should behave when changing an employee’s contract. This announcement shows we are taking action to tackle fire and re-hire practices by balancing protections for workers with business flexibility”

The Government’s press statement continued:

“The new Code clarifies how employers should behave when seeking to change employees’ terms and conditions, aiming to ensure employees are properly consulted and treated fairly.

Employers will now also need to explore alternatives to dismissal and re-engagement and have meaningful discussions with employees or trade unions to reach an agreed outcome.

The Code makes it clear to employers that they must not use threats of dismissal to pressurise employees into accepting new terms. They should also not raise the prospect of dismissal unreasonably early or threaten dismissal where it is not envisaged.”

Acas Chief Executive Susan Clews said:

Fire and rehire is an extreme step that can seriously damage working relations and has significant legal risks for organisations. Employers should focus on maintaining good employment relations to reach agreement with staff if they are thinking about making changes to their contracts.

Acas offers impartial advice on employment rights and obligations, and has expertise in helping parties to maintain good industrial relations and resolving disputes where they arise.

The Government’s new draft Code is clear that employers should contact Acas for advice before they raise the prospect of fire and rehire with employees.

Principal Policy Advisor at Institute of Directors, Alexandra Hall-Chen said:

“The publication of this Code of Practice provides employers with welcome clarity and practical guidance.

The Code rightly places good industrial relations at its core and represents an effective means of balancing worker protections with labour market flexibility.”

Head of Public Policy at CIPD, Ben Willmott said:

“The Code promotes good practice, making clear employers should always seek to agree any changes to terms and conditions with employees and that ‘fire and rehire’ should only be used as an absolute last resort.

It highlights the importance of early and meaningful consultation with employees to maximise the chances of finding alternative solutions which can lead to agreement over proposed changes.

It also emphasises that Acas has a key role to play and should be contacted by an employer for advice before it raises the prospect of fire and rehire with the workforce.”

Unions, however, were more sceptical about the proposed changes. Paul Nowak, general secretary of Trades Union Congress (TUC) argued that the Code would not prevent employers from using fire and rehire. He said:

“This code lacks bite and is not going to deter bad employers, like P&O, from treating staff like disposable labour. We need far more robust legislation to protect people at work, tinkering around the edges is not going to cut it.”

A 2021 poll by TUC showed that one in 10 workers were threatened with fire and rehire during the height of the Covid-19 pandemic.

Nautilus director of organising Martyn Gray said:

“Fire and rehire is a coercive practice used by employers to unilaterally weaken their employees’ terms and conditions, deliberately bypassing consultation with recognised unions.

Our message is simple: fire and rehire must be outlawed, nothing less is acceptable. Shortly after the public outrage of P&O Ferries mass-sacking in March 2022, the UK government announced it would take a series of actions to ensure this could never happen again.

‘While this code of practice would have increased the cost to P&O Ferries for carrying out their egregious actions, it would not have stopped it. This code of practice, put simply, does not meet the government’s own standard of ensuring another P&O Ferries cannot happen again.”

Commenting in the draft code, Unite general secretary Sharon Graham was scathing:

“Fire and rehire is an abhorrent practice used by the worst of the worst to attack their own workers. It should obviously be against the law, with serious penalties attached. The idea that a ‘code of conduct’ is going to stop employers like P&O from doing this is just a bad joke.

But let me make it clear, any employers considering using ‘fire and rehire’ against my members should know that they will be taking on the whole of Unite with all of our resources and industrial power.”