Government cracks down on ‘fire and rehire’ practices
Action against unscrupulous employers to tackle the use of controversial ‘fire and rehire’ practices has been rolled out by the government. Dismissal and re-engagement, also known as ‘fire and rehire’, refers to when an employer fires an employee and offers them a new contract on new, often less favourable terms.
The government has stated that it firmly opposes this practice being used as a negotiating tactic. Now, a new statutory Code of Practice has been published making clear how employers must behave in this area. This new Code of Practice will help to preserve security and opportunity for those in work, as part of the government's plan to grow the economy.
Business Minister Kevin Hollinrake said:
“Our new Code will crack down on employers mistreating employees and sets out how they should behave when changing an employee’s contract. This announcement shows we are taking action to tackle fire and re-hire practices by balancing protections for workers with business flexibility.”
In future the courts and employment tribunals will take the Code into account when considering relevant cases. This will include on unfair dismissal claims where the employer should have followed the Code. Employment tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code.
The new Code clarifies how employers should behave when seeking to change employees’ terms and conditions, aiming to ensure employees are properly consulted and treated fairly. Employers will now also need to explore alternatives to dismissal and re-engagement and have meaningful discussions with employees or trade unions to reach an agreed outcome.
The Code makes it clear to employers that they must not use threats of dismissal to pressurise employees into accepting new terms. They should also not raise the prospect of dismissal unreasonably early or threaten dismissal where it is not envisaged.
ACAS Chief Executive, Susan Clews said:
“Fire and rehire is an extreme step that can seriously damage working relations and has significant legal risks for organisations. Employers should focus on maintaining good employment relations to reach agreement with staff if they are thinking about making changes to their contracts.”
Head of Public Policy at CIPD, Ben Willmott said:
“The Code promotes good practice, making clear employers should always seek to agree any changes to terms and conditions with employees and that ‘fire and rehire’ should only be used as an absolute last resort. It highlights the importance of early and meaningful consultation with employees to maximise the chances of finding alternative solutions which can lead to agreement over proposed changes.”
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