The government has published a draft code of practice on dismissal and re-engagement, or ‘fire and rehire’ as it’s often called. The new Code will supplement ACAS guidance which was first published in 2021. A consultation on the draft Code is now underway and will run until 18 April. The final Code will then need to be laid before Parliament before it takes effect.
The Code is designed to promote good industrial relations by encouraging a genuine and open process when proposing a change to terms and conditions and by deterring employers from using threats of dismissal during negotiations to put pressure on employees to accept new terms. In the consultation paper which accompanies the Code the government says they want to ‘ensure that employers and employees are better equipped to manage change in a more balanced and collaborative way.’
People Management covers this with the headline ‘Fire and rehire code ‘has teeth’ but won’t directly change HR’s job, experts say. The reference to the code ‘having teeth’ is highlighting how, as with other statutory codes of practice, an employer’s failure to comply will give employment tribunals power to apply an uplift of up to 25% to compensation in relevant employment tribunal proceedings. The reference to it not directly changing HR’s job is right – HR’s role will continue to involve communicating with employees in a clear, fair and transparent way, holding meetings with employees or employee representatives etcetera, and this code doesn’t fundamentally change any of that.
So, what do we make of the draft Code? Earlier Ed Goodwyn joined me by phone from the London office to discuss it:
Ed Goodwyn: “I think is a bit of a damp squib. I think it may be a little bit generated by the political unrest that we heard about but I don't think it substantially changes the goalposts for an employer, other than the fact that it will allow employees who bring a claim to throw in an extra claim for a 25% uplift but fundamentally, what an employer used to do and has to do now in that space, the employer will still need to do. Most importantly, it does not outlaw the process of giving notice and looking to rehire to push through contract variations where you can't reach agreement.”
Joe Glavina: “Do you think the code will help employers, Ed?”
Ed Goodwyn: “The code is useful. It draws out the issues that we're used to advising clients who are trying to do this in difficult circumstances, i.e., the client would want to properly collectively consult because normally we're talking about 20 more employees having their contracts changed so we are in what us employment lawyers call section 188 collective consultation country, and there's a whole load of obligations there and the code replicates that. Equally, if an employee isn't prepared to accept the new contract, and they get dismissed, the employer will likely face unfair dismissal risks and, again, the code reminds employers of the sorts of discussion it needs to have with its employees to avoid a successful claim for unfair dismissal. So, the substantive goalposts haven't changed in my view, it repeats what a properly advised employer would be doing anyway, but it just gives the little sting in the tail of a 25% uplift. But that's the legal position. What is clear is irrespective of what the law is, hire and rehire has always been high risk from an ER/IR perspective. In light of the press and the articles recently, it is even more a big PR issue. So an employer has always been very cautious to go down that road and that, perhaps, is a little bit more concerning because of the fallout, and non-legal fallout, from it but that's always been the case. But the most important thing is the process is still able to be done and it's available for the employer if it is needed.”
The consultation on the draft Code closes on 18 April and the consultation paper sets out how you can respond to it and give your view. We have put a link to it in the transcript of this programme.
LINKS
- Link to Draft Code of Practice on Dismissal and Re-engagement
