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Dismissal and re-engagement – A new draft Code of Practice

The act of dismissal and re-engagement, more commonly known as fire and rehire, is a practice undertaken by employers when they are unable to reach an agreement on changes to employment contracts.

This grants the power for employers to dismiss staff and re-engage them with new contracts with their desired changes.

The Government has revealed a new draft Code of Practice (the Code), changing the guidance on fire and rehire for employers.

What does the Code provide?

The Code sets out what is expected of employers if they decide to make changes to their employee’s contracts and eventually engage in dismissal and re-engagement proceedings.

This should follow the process of:

Holding a consultation with staff and representatives
Sharing key information
Taking reasonable steps to find alternatives
Re-considering changes with feedback from the consultation
Only engaging in dismissal and re-engagement as a last resort
Providing support for staff throughout the process.

This Code is for guidance but may also be used by employees who feel that they have been treated unfairly.

If you as an employer are found to have breached the Code, you could face penalties at an employment tribunal.

Finding alternatives to fire and rehire

In part of the Government’s move to discourage fire and rehire practices, one of the main points highlighted in the Code of Conduct is to find alternative arrangements.

This means that if you are looking to change an employee’s contract, you must only use dismissal and re-engagement as a final resort.

Failure to explore alternatives could result in employees claiming that they have been unfairly dismissed.

Consultation

As part of the Code and any dismissal and re-engagement practices, you must engage in a consultation with your employees and their representatives as soon as you make the decision to change employment contracts. This should include any trade unions that your staff are members of.

There is no set timeline for the length of the consultation, but it is advised that you consult for a substantial period. This allows for time to come to a potential agreement, as well as ensuring compliance.

As part of the consultation, you must share information with your staff as early as possible. This includes:

What the proposed changes to the contract are
Who will be affected by the changes
The business reasons for the changes
The predicted timeline for the implementation of these changes
Other options to be considered
The proposed next steps.

You should also let your employees know that you intend to engage in dismissal and re-engagement practices if it looks like an agreement may not be reached.

Offering dismissal and re-engagement

You may still engage in fire and rehire practices if no agreement can be reached. However, the Code sets out the best practice for doing so. This includes:

Providing longer notice periods to allow employees to make arrangements
Offer practical support to employees
Commit to reviewing the changes at a fixed point in the future
Phasing in changes gradually
Inviting and accepting feedback from employees.

Adapting to the draft Code of Practice

Whilst the Code is set to come into force officially during summer, it is best to adapt your practices now to ensure compliance.

Failing to comply with the Code could lead to your business being taken to an Employment Tribunal. If you are found to have not followed the Code, the Tribunal can increase the award by up to 25 per cent.

It is best to talk to a legal expert to ensure that you are not breaching the law when looking to change your employment contracts.

If you need help with your employment contracts, get in touch with our team today.

Amanda Hyam

Head of Dispute Resolution and Employment

I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.