The practice of ‘fire and rehire’ refers to when an employer dismisses a worker and rehires them on new, less-favourable terms. A statutory code on the practice of ‘fire and rehire’ will clamp down on controversial tactics used by employers who fail to engage in meaningful consultations with employees. The new Statutory Code of Practice will detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms.
This is what P&O Ferries failed to do – as its CEO made clear, the company never had any intention of consulting workers, and they are now rightly facing backlash from workers, the public and the government.
The code will include practical steps that employers should follow. A court or Employment Tribunal will take the code into account when considering relevant cases, including unfair dismissal. The courts will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code where it applies.
In November 2021, Acas – the Advisory, Conciliation and Arbitration Service – published guidance for employers considering making changes to employment contracts, making clear that fire and rehire should be an option of last resort and that employers should first have made all reasonable attempts to reach agreement through full consultation.
The government is now going further, by developing a new Statutory Code of Practice, which will clarify and give some legal force to government expectations that employers should behave fairly and reasonably when seeking to change employees’ terms and conditions.
The code will act as a deterrent, particularly to those employers seeking to use the threat of fire and rehire as a negotiation tactic.
This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are reported, the information does not set out all of the facts, the legal arguments presented and the judgments made in every aspect of the case. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, we cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.
