Fire & Re-hire – New Draft Code of Practice
The Government have issued an update to the draft code of practice on dismissal and re-engagement, commonly referred to as “fire and re hire”. After the media coverage on the actions of P&O Ferries use of this, the Government announced stricter procedures for employers when considering their options.
Fire and re hire tactics are most often used to put in place less favourable employment terms, that employees would not ordinarily agree to. Whilst the practice of dismissing an employee exposes a company to a claim for unfair dismissal, the act of immediately offering terms of re engagement to the employee (on the less favourable basis) acts to reduce the compensation an employee may be entitled to in the Employment Tribunal.
The new code is likely to come into force later this year and is intended to ensure employers take all reasonable steps to explore alternatives to dismissal and engage in meaningful consultation with a view to achieving an agreed outcome with employees.
What does the code say?
The code outlines 54 points employers should do and / or take into consideration when thinking about implementing fire and re hire procedures and what to do if this is really the only option. The full code can be found here: Draft code of practice: issued by the Secretary of State under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992 on dismissal and re-engagement (publishing.service.gov.uk)
These include:
- Contacting ACAS before raising the prospect of fire and re hire with employees.
- Employers should consult with employees for as long as reasonably possible. Although no reference to what a reasonable time is has been provided.
- Employers are required to provide information as early as possible to employees and share as much information as reasonably possible.
- It is good practice to provide the information in writing to the employee.
- Employers can inform employees that dismissal and re-engagement is an option but cannot use this as a threat for employees to agree to changes.
- Consultation should be open and in good faith.
- There is the potential of up to a 25% uplift in compensation for employers who fail to follow the code.
Points to note
A failure alone to follow the code does not give rise to an Employment Tribunal claim, this would need to be combined with another claim. The claim most likely to be linked with a failure to follow this code would be Unfair Dismissal.
In addition to this, although employers are encouraged to be open and share information with employees, you will still be able to withhold any confidential information using the company’s discretion.
The code will not apply in redundancy situations, unless dismissal and re-engagement is an option and then the code will need to be followed.
What does this mean for you and your business?
The code is still in draft form but it is likely to be implemented towards the end of this year and our advice is that if there are other options available to the business instead of dismissal and re-engagement, these should be used.
Fire and re hire should only ever be a last resort and is likely to be frowned upon in an Employment Tribunal if they view another option might have been available to your business.
There are always risks associated with this kind of action, even when the code is followed including:
- Risks of a legal claim and damage to the reputation of the company
- This process could be harmful to your employees’ morale at work
- There is the potential that use of this could damage employment relationships and you could find staff moving on from your business.
If you have any questions about the code or if your business needs advice on dismissal and re engagement or if you have any other employment queries, please contact one of our Employment team on 01246 555 111 or contact:
Amy Hallam
Head of Employment
t: 0114 3496989
e: amy.hallam@brmlaw.co.uk
Ellie Leatherday
Associate
t: 01246 564002
e: ellie.leatherday@brmlaw.co.uk
Jade Taylor
Trainee Solicitor
t: 01246 560587
e: jade.taylor@brmlaw.co.uk
