The Government is consulting on a draft Code of Practice that will regulate the practice of dismissal and re-engagement, or “fire and re-hire”, as it has become known more recently. This is the practice that became particularly controversial following the dismissal by P&O of 800 staff in 2022, in order to replace them with lower-cost workers. It is sometimes used by employers looking to make changes to terms and conditions across the workforce, where employee agreement cannot be obtained. Instead of imposing the changes unilaterally, which is often not possible, the employees’ existing contracts are terminated and they are offered new ones containing the new terms.
At the time of the P&O dismissals, there was a call from certain sectors for fire and re-hire to be made illegal, but the Government has not done that. Instead, the new Code sets out various steps the employer must go through, in terms of informing and consulting with staff and re-assessing its plans, before it reaches the stage of dismissal, with that very much being a last resort. It is true that much of what is in the Code is what is essentially already required in any large re-contracting exercise where the collective consultation law applies (20 or more employees at the same establishment). But in times of crisis, e.g. the recent Covid-19 pandemic, employers may need to implement changes as quickly as possible and look for the shortest form of consultation it can achieve. Under the new Code, that will be more difficult. So in cases where the employer does have more time, it should be ready to begin its consultation process as soon as possible in order to allow time to meet the Code requirements. If there is an unreasonable failure to comply with the Code, any employment tribunal award can be increased by 25%.
The consultation process closes on 18 April 2023, with the new Code coming into force some time after that, once the Government has considered the responses it receives. See the full text of the draft Code and consultation paper here: Draft Code of Practice on dismissal and re-engagement – GOV.UK (www.gov.uk)