A new statutory code of practice on dismissal and re-engagement, commonly known as fire and rehire, will come into force in July after legislation progressed late last week.
A statutory instrument made on Friday and laid before Parliament today (28 May), will come into force in England, Scotland and Wales on 18 July 2024 unless it is repealed by a new government after the general election on 4 July.
Labour, currently 21 points ahead of the Conservatives in general election polls, has described the code as “inadequate” and says it will “strengthen” it.
As it stands, employment tribunals 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.
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Speaking in February as the government published its draft code, 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 rehire practices by balancing protections for workers with business flexibility”.
The 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 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 pressure 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 in February: “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.”
But Paul Nowak, general secretary of the TUC, said at the time: “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.
“One in 10 were threatened with fire and rehire during the pandemic – tinkering around the edges is not going to cut it.”
On Sunday, Labour’s shadow chancellor insisted “fire and rehire” practices would – under a Labour government – be banned in general but that there had to be some exceptions.
Rachel Reeves told the BBC. “We will end fire and rehire, but when a company is facing bankruptcy, and there is no alternative, they will have to consult with their workers and with their trade unions. Those are very, very limited circumstances.”
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