The government will publish a new statutory code on ‘fire and rehire’ tactics in a bid to clamp down on unscrupulous employers.
Labour markets minister Paul Scully announced the code yesterday (29 March) in parliament, after multiple calls from unions for the government to act after the sackings of 800 P&O Ferries workers earlier this month.
The Department for Business, Energy and Industrial Strategy said the code would “detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms”.
“This is what P&O Ferries failed to do – as its CEO made clear, the company never had any intention of consulting workers, and they are now rightly facing backlash from workers, the public and the government.”
Fire and rehire refers to the practice where an employer dismisses a group of workers with the aim of re-engaging them on less favourable terms and conditions.
Fire and rehire
Employment tribunals will now have to take the new code into account when considering claims such as unfair dismissal, and courts will have the power to apply an uplift of up to 25% to claimants’ compensation if an employer fails to comply with the code where it applies.
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.
“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.”
The government did not offer a date for publication of the code but told Personnel Today it was working “at speed” to bring it into being.
Labour pushed for an emergency vote on banning fire and rehire tactics last week, but the vote was defeated by 251 votes to 188 as Conservative ministers failed to back the motion.
Conciliation service Acas published its own guidance on ‘fire and rehire’ in November 2021, urging employers to explore alternative options before changing employees’ terms and conditions.
Raoul Parekh, partner at law firm GQ|Littler said: “The vast majority of businesses want to do right by their employees. However, on rare occasions they are faced with the difficult decision of either changing terms and conditions, letting go of employees or simply going insolvent.
“It is better for employers to preserve some jobs rather than everyone becoming unemployed as a result of the business going under. Given the exceptional circumstances presented by Brexit, the pandemic and now rising interest rates and inflation, there may be more cases like this in the coming months.
“Unfortunately, a small number of employers do behave unreasonably and either breach the law or fail to engage properly with employees. While the existing code won’t change the law as such, it will make the risks of doing so more severe. This should benefit both employees and those employers who are already doing the right thing.”
This week transport secretary Grant Shapps offered P&O Ferries “one final opportunity” to reverse its decision not to reinstate workers’ jobs, but chief executive Peter Hebblethwaite refused, saying it would cause the collapse of the company.