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This article was updated on 2 August 2024 to take account of the changes to the statutory Code of Practice on fire and re-hire as re-issued by the Government on 30 July 2024. 

On 18 July 2024, the Secretary of State issued the Statutory Code of Practice on Dismissal and Re-engagement under Section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. This is more commonly referred to as the Code of Practice on ‘fire and re-hire’.

The code provides practical guidance on how to promote the improvement of industrial relations. The Secretary of State considered that the practice of dismissing and re-hiring employees as a means to change their terms and conditions of employment could give rise to conflict between employers, employees and Trade Unions, which could subsequently lead to a deterioration in employment and industrial relations.

The code will provide guidance to employers, employees and their representatives where an employer is considering making changes to one or more of its employees’ contracts of employment and envisages that if the employee does not agree to some or all of the changes, the employer may opt for dismissal and re-engagement in respect of that employee. Some of the key provisions include;

• Employers need to explore alternatives to ‘fire and rehire’ and it should only be used as a last resort.
• Employers should not threaten dismissal if it is not actually envisaged and must not coerce employees into signing new terms and conditions.
• The employer should ensure that the only terms which are changed are those which have been subject to the information-sharing and consultation process and should not use this as an opportunity to make any further changes.
• A requirement to consult ‘for as long as reasonably possible’, but — unlike collective redundancy consultation — there is no minimum time period. Employers are told to contact Acas at an early stage before they raise ‘fire and rehire’ with the workforce.
• Once the employer becomes aware the proposed changes are not agreed, they should re-examine them. The employer should consider feedback from employees and/or their representatives.
• The employer might commit to reviewing the changes at a future set time and reconsider whether they are still needed. If more than one change is being implemented, the employer might also consider introducing them on a phased basis.

Whilst there is no stand alone claim for a breach of the code and its provisions, the Tribunals must take this into account in all relevant cases, including claims for unfair dismissal. The Tribunals will have the ability to uplift compensation by up to 25% if an employer unreasonably fails to follow it or reduce any award by up to 25% if the employee has unreasonably failed to comply. However, the uplift will not apply to protective awards for failure to inform and consult in consultation redundancy situations.

It is also worth noting that the Labour party have pledged to legislate to end ‘fire and re-hire’ and to replace and strengthen the code. Therefore, if you are facing any issues in relation to the above, speak to our specialist employment team where we can provide up-to-date information and advise you on how to manage any potential conflicts which may arise.