- Plans for a new statutory code will crack down on
unscrupulous employers that use controversial dismissal tactics
- courts to be given power to apply a 25% uplift to an
employee’s compensation in certain circumstances if an employer
doesn’t follow the new Code
- Business Secretary : “Our new code will crack
down on firms mistreating employees and set out how they should
behave when changing an employee’s contract.”
The government is taking strong action against unscrupulous
employers that use the controversial practice of ‘fire and
rehire’, it has announced today (Tuesday 24 January).
Last year P&O Ferries deliberately sought to evade the law by
sacking 786 seafarers without due consultation. Having made no
efforts to inform the Business Secretary at the time, they failed
to follow best practice or do the right thing for their
employees. As a result, , as Transport Secretary at the
time, introduced a 9-point plan including primary legislation to
tackle these issues.
Through a planned statutory code of practice, the government is
protecting employees and cracking down on employers that use
controversial dismissal tactics. The code, subject to a
consultation first, will make it explicitly clear to employers
that they must not use threats of dismissal to pressurise
employees into accepting new terms, and that they should have
honest and open-minded discussions with their employees and
representatives.
‘Fire and rehire’ refers to when an employer fires an employee
and offers them a new contract on new, often less-favourable
terms. The government has been clear on its opposition to this
practice being used as a negotiating tactic and is now making it
clear how it expects employers to behave.
This new statutory code of practice will set out employers’
responsibilities when seeking to change contractual terms and
conditions of employment, including that businesses must consult
with employees in a fair and transparent way when proposing
changes to their employment terms.
Once in force, Courts and Employment Tribunals will be able to
take the code into account when considering relevant cases,
including unfair dismissal. They will have the power to apply a
25% uplift to an employee’s compensation in certain circumstances
if an employer is found to not comply with the statutory code.
Business Secretary said:
Using fire and rehire as a negotiation tactic is a quick-fire way
to damage your reputation as a business. Our new code will crack
down on firms mistreating employees and set out how they should
behave when changing an employee’s contract.
We are determined to do all we can to protect and enhance
workers’ rights across the country.
Maritime Minister Baroness Vere said:
We remain committed to protecting seafarers and championing the
importance of their welfare. This new code goes one step further
to doing just that, helping us ensure employees are treated
fairly and employers hold meaningful consultations on any
proposed changes to employment terms.
This forms part of our 9-point plan to reform and improve
seafarer welfare and close down any legal loopholes that allow
employers to avoid paying them – irrespective of flag or
nationality.
Employers should be deterred from using this controversial tactic
and must ensure they do not mistreat employees. If they do, they
risk poor relations with their employees, and will open
themselves up to the risk of legal claims.
The government asked the Advisory, Conciliation and Arbitration
Service to produce guidance for employers, which was published in
2021. This new Code of Practice shows the government is going a
step further to protect workers across the country, while
balancing that with the flexibility that businesses require.
Notes to editors
A consultation will run for the next 12 weeks to invite views
from the public and other interested groups on a new statutory
code for employers seeking to change employee terms and
conditions.
Individuals or groups with an interest can take part in the
consultation: Draft Code of Practice on
dismissal and re-engagement.
