Draft Code of Practice on Fire & Re-Hire

The Government has published its response to the consultation on the draft statutory Code of Practice on Dismissal and Re-engagement, which ran from 24 January to 18 April 2023. The Government has presented an updated draft Code, along with an explanatory memorandum, to Parliament for approval.

The Code sets out how employers should act when seeking to change employment terms and conditions if the employer envisages dismissal and re-engagement. 

1. It requires employers to consult employees and explore alternative options, without raising the prospect of dismissal unreasonably early or using the threat of dismissal as a negotiating tactic to put undue pressure on employees in circumstances where the employer is not envisaging dismissal.
2. It seeks to ensure dismissal and re-engagement is used only as a last resort. It will apply regardless of the number of employees affected, or potentially affected, by the employer’s proposals, and regardless of the employer’s reasons for seeking changes to terms and conditions.
3. The Government made a number of changes to the draft Code, for example, the Code was amended to clarify that, while it will not apply where an employer is only envisaging making employees redundant, however in scenarios where an employer is envisaging both redundancy and dismissal and re-engagement in respect of the same employees, the Code will apply for as long as dismissal and re-engagement remains an option. 
4. The Code has been reordered so that an employer will only be required to re-examine its plans, as opposed to re-examining both its business strategy and its plans. 
5. Also, a paragraph on contacting Acas has been strengthened so that employers should contact Acas before raising the prospect of dismissal and re-engagement, but clarifying that this does not change the general position that Acas can be contacted wherever the Code applies. 

Failure to follow the Code once in force will not, in itself, make a person or organisation liable to proceedings. However, under S.207 of the Trade Union and Labour Relations (Consolidation) Act 1992, the Code will be admissible in evidence in proceedings before a court, employment tribunal or the Central Arbitration Committee, and any provision of the Code which is relevant to those proceedings will have to be taken into account by the court, tribunal or Committee. 

In addition, if an employee brings one of the employment tribunal claims listed in Schedule A2 to TULR(C)A, and the claim concerns a matter to which the Code applies, then the tribunal will be entitled to increase any award it makes by up to 25% if the employer has unreasonably failed to comply with the Code; or reduce any award by up to 25% where it is the employee who has unreasonably failed to comply.

Critics of the Code are of the view it will do little to protect employees from being fired and re-hired where an employer wants to push through changes to its terms and conditions, however, it will at the very least potentially provide a stronger commitment to consultation before such changes are forced through by the blunt tool of firing and re-hiring. Given that A 2022 Reddit poll found that 75% of the British public said fire and rehire should be banned, the Code appears to be a rather lukewarm response to something the public would like to see go altogether.