Consultation on 'fire and rehire' open until 18 April 2023

On 24 January, the Department for Business, Energy & Industrial Strategy published its Draft Code of Practice on Dismissal and Re-engagement ("the Code") and launched a consultation in respect of the same.

What is dismissal and re-engagement?

Colloquially known as 'fire and rehire', dismissal and re-engagement is a strategy used when an employer facilitates a change to an employees' terms and conditions by dismissing them and then offering them re-engagement on the new terms. This is usually done where it is identified that changes need to be made and agreement has sought to be agreed between the parties, but has not been able to be.

The practice has attracted significant media coverage recently and Acas were asked by the Government to review it to better understand in what ways and how frequently it was being used and who was being impacted. Acas published their findings in 2021, which confirmed, amongst other things, that it was being used more frequently during the pandemic, and threats of dismissal were being made to place undue pressure on employees at the outset of negotiations. Following Acas' findings, the Government tasked Acas with producing guidance for employers, which was subsequently published later that year.

What is the Code?

The Government is now going further and proposing to issue a statutory code of practice on dismissal and re-engagement, which would apply to any situation where an employer:

• considers that it wants to make changes to its employees' contracts of employment, and

• envisages that, if the employees do not agree, the employer may dismiss them and either offer them re-engagement on new terms, or hire other employees to perform the relevant roles on the new terms.

The Code would apply irrespective of the number of employees affected or potentially affected.

The Code lays out a step by step process of what an employer should do and what their responsibilities are if there is a prospect of dismissal and re-engagement. Its ultimate aim is to promote good industrial relations and ensure that the practice is used only as a last resort.

The Code itself would not impose legal obligations in its' own right, however any an unreasonable failure to follow it by an employer or employee would grant an Employment Tribunal the power to uplift or decrease (respectively) any compensation awarded in a successful claim at a Tribunal.

In practice, much of what is in the draft Code is what we understand many employers to already do when they are faced with situations of needing to change terms and conditions. Nevertheless, it will be important to keep an eye on the Code due its' potential influence on compensation in Employment Tribunal cases in due course.

The Code is open for consultation until 23:59 on 18 April 2023.