In January the Department for Business, Energy and Industrial Strategy (BEIS) published a draft code of practice on dismissal and re-engagement and launched a consultation seeking views on the code.
The practice, known as ‘fire and rehire’, refers to employers dismissing employees and rehiring them, usually on less favourable or different terms than under their previous contract of employment.
The draft ‘fire and rehire’ code of practice requires employers to genuinely explore alternatives to dismissal and re-engagement in a meaningful way with unions or employees.
It will apply where the employer wants to make changes to terms of employment and, if employees do not agree, they envisage the need to dismiss and offer re-employment on the new terms.
The draft code outlines a step-by-step process that employers must follow exploring options to avoid the need for dismissals including:
- Firstly, explaining the change needed and the reasons why,
- Reassessing the change itself and the need for the change, subject to employee objections.
- Engaging in meaningful consultation, not threatening dismissal as a negotiation tactic.
- Ensuring the consultation is for a period long enough to allow for in-depth discussion.
If an employer fails to follow the code, they will be liable for an uplift to any tribunal awards of up to 25%.
The consultation on the code runs until 18 April. It will be interesting to see the responses, as many employers don’t see dismissal and re-engagement as a fair option anyway. It is generally regarded as a last resort and, thankfully, situations like that involving P&O Ferries are uncommon.