What will the new fire and rehire code of practice mean for employers?

Wednesday February 15, 2023

In the wake of scandals such as the P&O Ferries case in 2022, the government has announced a crackdown on firing and rehiring. That is the practice of dismissing staff one day and rehiring the next on different terms and conditions.

Currently in a 12-week consultation period, they are proposing a statutory code of practice by which employers must abide if they want to change contractual terms and conditions of employment. This would compel employers to consult with staff in a transparent and fair manner.

Under the code, should it be ratified in its current guise, an agreed solution must be sought. If agreement cannot be found, the business must actively examine the business case. If there is no other reasonable alternative, then fire and rehire (more formally known as dismissal and reengagement) would still be permissible.

In exploring all reasonable steps, discussions should be made in good faith with individual employees, appointed representatives or trade unions as appropriate. It is important that these are conducted with an open mind to give the talks every chance.

There isn’t a set time period that the discussions must last in the current draft of the code, but it suggests a longer consultation would be seen favourably.

Failure to comply with the statutory code of practice would expose you to a potential 25% uplift in compensation if the employee won a case for unfair dismissal.

Is fire and rehire ever legitimate?

The practice of firing and rehiring (dismissal and reengagement) was not invented in 2022 – it has been around for decades. It can be carried out legally if a negotiation to change terms and conditions is first pursued and the original contracts are honoured up to their termination.

When this doesn’t happen then employment claims can be initiated. As we saw in the P&O Ferries case, it can lead to very bad PR whether it goes to court or not, as it is clearly shoddy treatment of a workforce.

Help when you feel like fire and rehire is your only choice

Our approach is always to advise treating employees fairly and transparently. We do, though, set our stall on saying that we tell employers what they can do, not what they can’t. Therefore, if you need to introduce big changes to your current terms and conditions of employment we would first give you a fresh set of eyes on your situation to see if there is anything you are missing.

We’d help you get the necessary outcome while meeting all the new requirements of the code.

If you would like to discuss this in more detail in relation to your company, please do not hesitate to get in touch with us. We will be happy to talk through your options and advise on your next steps.

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