Case law | A new statutory code of practice: ‘fire and re-hire’ | Moorepay
March 20, 2024

Case law | A new statutory code of practice: ‘fire and re-hire’

A new statutory code of practice on ‘fire and re-hire’ will be introduced. It will set out the expected procedure for employers to follow when contemplating dismissals for employees who do not agree to changes to their terms and conditions. 

The plan is to introduce a new statutory Code of Practice that aims at curbing the misuse of fire and rehire tactics that cause concerns about workers’ rights.

Fire and rehire tactics

In the official announcement on 19 February 2024, the government committed to combating the misuse of fire and rehire tactics. 

These tactics involve employers terminating employees and subsequently offering them new contracts with less favourable terms. 

This practice has been used as a negotiating ploy, prompting the government to intervene and safeguard workers from potential exploitation.

The press release also provided insights into the background of the government’s initiative. The consultation period, spanning 12 weeks, sought public and stakeholder input on the new statutory Code. 

 

Following this inclusive approach, the government has laid the Code of Practice in Parliament for approval by both Houses. The expectation is that it will come into effect later in the summer.

The new Code will crack down on employers mistreating employees and sets out how they should behave when changing an employee’s contract.

The Code promotes good practice, making clear employers should always seek to agree any changes to terms and conditions with employees. This highlights the emphasis on early and meaningful consultation with employees.

Impact of the new Code

A central component of the government’s approach is the empowerment of employment tribunals. They will apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code. 

This punitive measure aims to ensure strict adherence to the guidelines laid out in the Code, creating a tangible consequence for employers who neglect their responsibilities.

The Code, outlined in the press release, is structured to protect workers rights while acknowledging the necessity for business flexibility. It lists the proper conduct employers must follow when contemplating changes to employees’ terms and conditions. 

The Code, outlined in the press release, is structured to protect workers rights while acknowledging the necessity for business flexibility. It lists the proper conduct employers must follow when contemplating changes to employees’ terms and conditions. 

Further, it explicitly targets the contentious fire and rehire tactics that have gained notoriety in recent years.

Crucially, the Code requires employers to engage in meaningful discussions with employees or trade unions before considering fire and rehire tactics. This emphasis on open communication and exploration of alternatives aims to foster a fair and consultative approach to employment changes.

Crucially, the Code requires employers to engage in meaningful discussions with employees or trade unions before considering fire and rehire tactics. This emphasis on open communication and exploration of alternatives aims to foster a fair and consultative approach to employment changes.

Furthermore, the government underscores the importance of not resorting to threats of dismissal to pressure employees into accepting new terms. 

The Code advises against raising the prospect of dismissal unreasonably early or threatening dismissal without a genuine cause. By clearly defining these parameters, the government aims to prevent the abuse of dismissal tactics as a coercive negotiation tool.

Eradicating fire and rehire tactics

The introduction of the new statutory Code of Practice, combined with the potential legal consequences for non-compliance, marks a significant stride in protecting workers’ rights and fostering a fair and consultative approach to employment changes. 

As the Code heads for parliamentary approval, the government aims to strike a balance between business flexibility and workers’ wellbeing. This further sets a precedent for responsible employment practices in the UK and the reduction of fire and rehire tactics.

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About the author

Rob Woodward

Originally a performer with a background in screen and playwriting, Rob has transferred his creative writing skills into the content marketing domain. Rob is responsible for the creation of our HR & payroll content, as well as the delivery of our customer communications.

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