Draft Code of Practice on fire and re-hire

The Department for Business, Energy & Industrial Strategy has published a consultation on a Draft Code of Practice on Dismissal and Re-engagement (the ‘Code’).  

Dismissal and re-engagement is a practice of last resort, used where an employer is seeking to change employee terms and conditions and is not able to agree those changes with employees. Dismissal and re-engagement carries significant risks for employers, legally there is a real risk of claims of unfair dismissal brought by employees in the Employment Tribunal, and practically dismissing and re-engaging staff on terms they were not willing to agree to is likely to significantly damage employee relations and the employer’s reputation.

The Code does not change the position or risks in relation to fire and re-hire, its purpose is to ensure that an employer takes all reasonable steps to explore alternatives to dismissal and engages in meaningful consultation with trade unions, other employee representatives or the individual employees. The Code provides practical steps for employers to follow in Sections A to G. Upon realising employees are unlikely to agree the changes, the Code envisages employers reconsidering the need for changes and engaging in further consultation with trade unions, representatives/employees to find an agreed solution.

The Code does not impose legal obligations however in a claim a party may be able to rely on the Code to ask an Employment Tribunal to increase or decrease any award by up to 25% where one party has unreasonably failed to comply with the Code.

The Code applies regardless of the size and number of employees and states that it would not apply in a redundancy situation.  

The consultation is due to close on 18 April 2023 and will be implemented when parliament allows.