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Dismissal and re-engagement, or “fire and rehire” as it is commonly referred to, is the practice of employers forcing contractual changes upon its employees by dismissing them and immediately offering new terms.
Acas guidance states that dismissal and re-engagement should be used as a last resort. Before dismissing, an employer should make all reasonable attempts to reach agreement through consultation.
Whilst dismissal and re-engagement tends to be associated with large or unionised organisations, it is still used as a pressure tactic amongst a wide range of businesses and sectors.
In the wake of the P&O Ferries’ dismissal of around 800 employees in 2022, the government announced that a new Statutory Code of Practice (“the Code”) would be published on the use of this tactic to enforce changes to contracts of employment. Consultation on the draft Code closed in April last year and an updated version has now been published.
The Code applies regardless of the size of the employer or business reasons for proposed changes. Amongst other points, it also sets out information to be shared by the employer such as what proposed changes are, who will be affected by them and the business reasons for the changes.
A breach of the Code will not give rise to a stand-alone claim, however, it will be admissible as part of another substantive claim and any part of the Code that is relevant, must be considered by the court or tribunal.
If an employee brings certain claims, the tribunal can increase any award by up to 25% if the employer has unreasonably failed to comply with the Code. Equally, any award can be decreased by 25% if the employee is deemed to have unreasonably failed to comply.
The government expects the Code to be in effect by Summer 2024.
If you require legal advice on the content of this article, speak to a member of our employment team on 01689 887 887.