DANIEL GORRY: What now for fire and rehire?

The new draft Code of Practice on Dismissal and Re-engagement proposed by the UK government has sparked intense discussion and debate among employers and employees. The code aims to provide a clear and concise procedure that employers must follow when proposing changes to employees’ terms and conditions, including significant alterations to working hours or pay.

Although the code is not yet official, it is expected to be implemented after the consultation period ends on April 18. The execution of this code could significantly impact how employers handle employment changes and could potentially reduce the use of the controversial practice of fire and rehire in the UK, including Scotland.

Due to the strong public sentiment against fire and rehire practices, employers are advised to explore alternative solutions and engage in meaningful consultations with employees before considering such a step. This is reinforced by Acas’ report on fire and rehire practices in the UK, which recommends that employers only resort to fire and rehire as a last resort after exploring alternative options such as voluntary redundancies.

The draft code goes further than the Acas report in providing a prescriptive process for employers to follow when proposing changes to employees’ terms and conditions. The code emphasises that employers should not use threats of dismissal as a negotiating tool and that unilateral changes to contracts are likely to harm industrial relations.

Under the proposed code, dismissal and re-engagement should be considered a last resort, and employers must provide as much notice as possible and consider employees’ specific needs.

The code also recommends that if multiple changes to terms and conditions are sought, they should be implemented (where possible) over a period of time. It further suggests that if the reason for changing terms ceases to be relevant, original terms should be reintroduced.

While the code will not impose legal obligations on employers, it will be considered in any unfair dismissal claim. If an employer fails to comply with the code and an employee successfully brings a claim against them, the employee will be entitled to an uplift in compensation.

The new code is likely to make it more difficult for less scrupulous employers to inflict new terms through fire and rehire ultimatums. While reducing employees’ hours or pay may seem like the only option for businesses that would otherwise be forced to make staff redundant, fire and rehire practices may have negative consequences that can harm a company’s long-term success, including decreased employee morale and talent retention issues, not to mention legal implications.

The proposed code is a significant development that will considerably impact how UK employers handle employment changes. Employers must be mindful of the code’s recommendations to avoid legal action and maintain positive employee relations.

Do you want to respond to this article? If so, click here to submit your thoughts and they may be published in print.