The government has published a long-awaited draft of its statutory fire and rehire code, as it cracks down on unscrupulous methods of changing employment terms.
The code, which is subject to consultation, sets out employers’ responsibilities when seeking to change employees’ terms and conditions, and emphasises the importance of consultation with employee representatives or trade unions.
The government committed to publishing a statutory code on so-called fire and rehire practices following pressure from trade unions and business groups after the mass sacking of hundreds of P&O Ferries workers last year.
“Fire and rehire” or dismissal and re-engagement refers to when an employer ends an employee’s contract and then re-engages them on a new one with less favourable terms.
Fire and rehire code
The draft fire and rehire code also explains what an organisation should do if an agreement has not been reached, and says that they should not use threats of dismissal to pressurise staff into accepting new terms.
It makes it clear that dismissal and re-engagement on new terms should only be done as a last resort, and with legitimate business reasons.
Once in force, courts and employment tribunals will be able to take the fire and rehire code into account when considering claims from employees, and will have the power to apply a 25% uplift to an employee’s compensation if an organisation is found to have not followed the code.
However, the fire and rehire code itself imposes no legal obligations on employers and the government makes it clear that a failure to observe it does not, by itself, make an employer liable to legal proceedings.
A consultation into the draft dismissal and re-engagement code is open until 18 April 2023.
Business secretary Grant Shapps said: “Using fire and rehire as a negotiation tactic is a quick-fire way to damage your reputation as a business. Our new code will crack down on firms mistreating employees and set out how they should behave when changing an employee’s contract. “We are determined to do all we can to protect and enhance workers’ rights across the country.”
RMT general secretary Mick Lynch said: “Statutory guidance will not stop aggressive employers from firing staff and re-hiring them on inferior pay and terms and conditions.
“If the government doesn’t understand that, then we know they are on the side of P&O Ferries and not that of workers in Britain,” he said.
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Acas has also produced guidance on fire and rehire practices.
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