Government acts against controversial dismissal tactics through a
new statutory Code of Practice.
Employment tribunals will have the power to apply an uplift of up
to 25 percent of an employee’s compensation if an employer
unreasonably fails to comply with the code.
Code protects workers’ rights whilst respecting business
flexibility.
Action against unscrupulous employers to tackle the use of
controversial ‘fire and rehire’ practices will be rolled out by
the Government today [19 February].
Dismissal and re-engagement, also known as ‘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 that it firmly opposes this
practice being used as a negotiating tactic. Today, a new
statutory Code of Practice has been published making clear
how employers must behave in this area.
This new Code of Practice shows the Government is going a step
further to protect workers across the country. This will help to
preserve security and opportunity for those in work, as part of
our plan to grow the economy.
Business Minister said:
Our new Code will crack down on employers mistreating
employees and sets out how they should behave when changing an
employee’s contract.
This announcement shows we are taking action to tackle fire and
re-hire practices by balancing protections for workers with
business flexibility”.
In future the courts, and employment tribunals, will take the
Code into account when considering relevant cases. This will
include on unfair dismissal claims where the employer should have
followed the Code.
Employment tribunals will have the power to apply an uplift of up
to 25 percent of an employee’s compensation if an employer
unreasonably fails to comply with the Code.
The new Code clarifies how employers should behave when seeking
to change employees’ terms and conditions, aiming to ensure
employees are properly consulted and treated fairly.
Employers will now also need to explore alternatives to dismissal
and re-engagement and have meaningful discussions with employees
or trade unions to reach an agreed outcome.
The Code makes it clear to employers that they must not use
threats of dismissal to pressurise employees into accepting new
terms. They should also not raise the prospect of dismissal
unreasonably early or threaten dismissal where it is not
envisaged.
Acas Chief Executive Susan Clews said:
Fire and rehire is an extreme step that can seriously damage
working relations and has significant legal risks for
organisations. Employers should focus on maintaining good
employment relations to reach agreement with staff if they are
thinking about making changes to their contracts.
Acas offers impartial advice on employment rights and
obligations, and has expertise in helping parties to maintain
good industrial relations and resolving disputes where they
arise.
The Government’s new draft Code is clear that employers should
contact Acas for advice before they raise the prospect of fire
and rehire with employees.
Principal Policy Advisor at Institute of Directors,
Alexandra Hall-Chen said:
The publication of this Code of Practice provides employers with
welcome clarity and practical guidance.
The Code rightly places good industrial relations at its core and
represents an effective means of balancing worker protections
with labour market flexibility.
Head of Public Policy at CIPD, Ben Willmott
said:
The Code promotes good practice, making clear employers should
always seek to agree any changes to terms and conditions with
employees and that ‘fire and rehire’ should only be used as an
absolute last resort.
It highlights the importance of early and meaningful consultation
with employees to maximise the chances of finding alternative
solutions which can lead to agreement over proposed changes.
It also emphasises that Acas has a key role to play and should be
contacted by an employer for advice before it raises the prospect
of fire and rehire with the workforce.
The Government previously asked Acas to produce guidance for
employers on fire and rehire practices, which was published in
2021.
Background:
- The consultation ran for 12 weeks, inviting views from the
public and other interested groups on the new statutory Code.
- The Government has laid the Code of Practice in Parliament
for approval by both Houses. Subject to that approval, the Code
will then be brought into effect later in the summer.
