The Government’s Department for Business, Energy and Industrial Strategy (BEIS) has introduced a new Statutory Code of Practice on the use of “fire and rehire” when changing terms and conditions of employment.
The practice of “fire and rehire” refers to when an employer dismisses a worker or employee and then rehires them on new terms and conditions of employment.
Currently such practices are lawful, but they must be conducted in a manner which is fair and reasonable, and in line with the relevant fair dismissal provisions of the Employment Rights Act 1998.
P&O Ferries | Fire and Rehire
The BEIS mentioned the recent dismissal of 800 P&O Ferries’ employees without consultation, and even though this was not a strict case of fire and rehire (only “fire”), it appears to have been an integral factor to their decision to introduce a Statutory Code.
The intention for the Code is to provide practical steps and guidance for employers to follow in a consultation over changes to terms and conditions of employment.
In the future, the Code will be taken into consideration by Courts and Employment Tribunals when making decisions on relevant claims, including unfair dismissal.
Code of Practice | Guidance for Employers
If an employer does not follow the Code, the Employment Tribunal will have the power to apply a further 25% increase (uplift) on the employee’s awarded compensation – in a similar way to the current uplift available for breaches of the ACAS Code on Discipline and Grievance.
However, it is highly unlikely that this will be an outright ban on the practice of fire and rehire. The BEIS said employers could still do this “as an absolute last resort if changes to employment contracts are commercially critical and voluntary agreement is not possible”.
The Code has yet to be released, but it is unlikely to make any significant changes to the current standards of accepted practice. The law on fire and rehire already sets a high bar for procedural fairness. Indeed, it seems quite possible that it will protect the already well-developed practices that were outlined in last year’s ACAS guidance on making changes to employment contracts.
However, the Code will give the Employment Tribunal more teeth when issuing compensation, which will likely deter noncompliance with its standards.
In the meantime, employers should continue to seek legal advice from the Wirehouse Employment Law Consultancy team when considering any approach to amending employee terms and conditions of employment.