In brief

Following a public consultation last year, the UK government has now published a revised draft statutory Code of Practice on Dismissal and Re-engagement (also known as fire and rehire) for Parliament to approve.

Key takeaways 

• Following consultation on the earlier draft, the revised Code has been simplified, shortened and made less technical to aid understanding although the overall process and considerations remain broadly the same. 
• The purpose of the Code is to provide practical guidance on avoiding, managing and resolving conflicts resulting from the practice of dismissing and re-engaging employees as a means of changing terms and conditions of employment. It applies regardless of the numbers of employees potentially affected by the employer’s proposals and the employer’s reasons for seeking changes to terms and conditions of employment.
• As with the earlier draft, the Code emphasises that dismissal and re-engagement to effect changes to terms and conditions should be a “last resort” for the employer following “meaningful consultation” with employees and/or their representatives, and should not be used as a “negotiating tactic” by the employer “to put undue pressure on employees in circumstances where the employer is not, in fact, envisaging dismissal as a means of achieving its objectives”.
• As part of the consultation process, the employer should share as much information regarding the proposals, and as early as reasonably possible, to include:
  • What the proposed changes are (including what the proposed new and/or revised terms will look like).
  • Who will be affected by the proposed changes.
  • The business reasons for the proposed changes.
  • The anticipated timings for the introduction of the proposed changes and the reasons for those.
  • Any other options that have been considered.
  • The proposed next steps. 
• The Code states that the employer should contact Acas for advice before raising the prospect of dismissal and re-engagement although both employees and employers can contact Acas wherever the Code applies.
• If the Code is approved by Parliament, the government expects that it will be brought into effect later this summer. The Code does not impose any legal obligations on employers and there is no freestanding liability for breach. However, the Code will be taken into account by employment tribunals and courts in relevant proceedings (e.g., unfair dismissal claims). Failure to follow the Code could therefore increase the risk of a finding of unfair dismissal, if employees are ultimately dismissed as part of the procedure. A Tribunal may also adjust any award it makes by up to 25% if either party failed to comply with the Code (although in practice it imposes very few obligations on employees). 
• The Labour Party has committed to acting to end the practice of “fire and rehire” if it wins the next election. It has not set out detailed proposals but has indicated that this could involve changing unfair dismissal and redundancy legislation to prevent workers being dismissed for failing to agree a worse contract, as well as improving information and consultation procedures and making it easier for trade unions to take “defensive action”.

Draft code of practice: issued by the Secretary of State under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992 on dismissal and re-engagement (publishing.service.gov.uk).