Government publishes ‘fire and rehire’ draft code of practice

Summary of the draft Code of Practice

To curb the use of the controversial 'fire and rehire' tactics, where employers dismiss and rehire workers, usually on less favourable terms, the Government has published updated guidance. Subject to Parliamentary approval, the Code is expected to come into force this summer. 

The Code is effectively an employer’s guide on how to make ‘fire and rehire’ the option of last resort. It comprises sixteen pages of guidance, best practice and a recap on existing employer obligations, and, surprisingly, there is very little new material in it. For businesses considering fire and rehire tactics, the Code encourages employers to put the brakes on the process by requiring them to take advice from Acas and revisit their proposals, if consultation has ended without agreement, to see if there is another way forward. In following the Code, there is a need for employers to strike a balance between being clear that fire and rehire is being contemplated but not putting it out there as a possibility too early in consultation, or as a threat in order to apply undue pressure.

Fire and rehire practices will remain lawful

Fire and rehire practices will not be outlawed altogether but the Code introduces layers of process which, at its core, is information sharing and meaningful consultation, much of which will be familiar to employers from restructuring exercises. Unlike collective redundancy consultation, where employee thresholds trigger the process and timescale, the Code will kick in only where an employer both proposes making changes to employment contracts and envisages that, if it cannot reach agreement, it will consider dismissal and re-engagement on new terms. As to when this point arises, it is for the employer to determine when fire and rehire becomes an option if there is no other way forward, so a clear record of that decision-making process should be made to evidence this point.

Enforcement

In much the same way as the Acas Code of Practice on disciplinary and grievance procedures, the Code will be admissible in evidence in employment tribunal proceedings. The penalty for unreasonable failure to follow the Code is that an employment tribunal can uplift or reduce any award by up to 25%.