The new government has plans to outlaw, or severely curtail, the practice known as ‘firing and rehiring’. This is when an employer wants to make one or more changes to the terms and conditions of staff but can’t get their agreement, so they dismiss and offer re-engagement on the terms they want.
Until the change in law happens, there is now a new statutory Code of Practice on Dismissal and Re-engagement in force. Here, we take a look at what it says.
How do you legally change terms and conditions?
The basic position is that, with a few exceptions, firms can legally change employment contracts only by agreement. If, after trying to get agreement, this looks to be impossible, employers can lawfully terminate a contract – on the notice required by the contract – and offer immediate re-engagement on new terms. The employee can then decide not to accept them, in which case they are no longer employed, or accept them and continue working under new terms.
Isn’t that a dismissal?
Yes - whatever the employee decides to do, termination by an employer is always a dismissal and employees with over two years’ service can bring a claim for unfair dismissal to a tribunal. So, it is a high-risk for the employer but, quite often, if the employee goes to tribunal, the tribunal will hold the dismissal to be fair if the employer has a good business reason for it and has consulted with the staff affected.
Does the Code give employees new rights?
No, the Code doesn’t change the law - there is no stand-alone claim for breach of its provisions. However, the Code must be taken into account by employment tribunals in cases including unfair dismissal.
What happens if the Code isn’t followed?
It gives tribunals the ability to uplift compensation by up to 25% if an employer unreasonably fails to follow it. It will operate in a similar way to the Acas Code on Grievance and Disciplinary Procedures.
What does the Code require?
Key provisions include:
- ‘Fire and rehire’ should only be used as a last resort.
- The need to consult ‘for as long as reasonably possible’ – this is not defined – and explore the alternatives to ‘fire and rehire’.
- Employers should contact Acas at an early stage, before they raise ‘fire and rehire’ with the workforce.
- When an employer becomes aware that the proposed changes are not agreed, they should re-examine them, and consider feedback from staff.
- Employers should only threaten dismissal if they are actually envisaging it and must not use threats of dismissal to coerce staff into agreeing new terms and conditions.
- An employer might commit to reviewing the changes at a future set time and reconsider whether they are still needed.
What if several changes are envisaged?
A business can try to introduce any number of changes, but the Code says that ‘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.’ Further, the Code suggests that an employer might consider introducing multiple changes on a phased basis.
Will it stay in force?
The Code is unlikely to remain in force in this form for very long. The Labour government has pledged to legislate to ‘end fire and rehire’ and to replace and strengthen the Code. We don’t yet have any information about what the new law will look like or when it will come into force.
How 3CS can help
If you require advice about the Code, firing and re-hiring, or any other aspect of employment law and practice, please contact get in touch.
