Tribunal uplifts for ‘fire and rehire’ code breaches to take effect

Employers that fail to comply with the statutory code of practice on dismissal and re-engagement – or ‘fire and rehire’ – could be forced to pay higher levels of compensation from next month. 

The new code gives tribunals the ability to uplift compensation by 25% if an employer unreasonably fails to follow it.

When the code came into force in July this year, it failed to include protective awards among the uplifts that could be applied for non-compliance.

Protective awards have historically been made by tribunals where employers have failed to comply with collective consultation obligations in redundancy situations involving 20 or more employees, and are up to 90 days’ gross salary.

A statutory instrument amending the Trade Union and Labour Relations (Consolidation) Act 1992 has added failure to follow collective consultation requirements to the list of claims to which the uplift applies.

This order comes into force from 20 January 2025. After this, any employers planning large-scale redundancies will need to consider the financial risks of a potential 25% uplift to any tribunal compensation for a breach of the code, as well as their collective consultation obligations.

The code was introduced after criticism of a number of employers such as P&O Ferries using ‘fire and rehire’ to drive down wages and cut costs.

After the July election, the government pledged to eradicate such practices, and a consultation closed last week on strengthening the existing code, which was introduced by the previous administration.

The consultation asked for views on increasing the maximum period for the protective award in cases where employers have not complied with collective redundancy rules, and adding interim relief to collective redundancies and unfair dismissals in fire and rehire scenarios.

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