Code of Practice on Dismissal and Re-engagement

Following consultation in 2023, the government made a number of changes to the draft Code produced in response to the views expressed.

On 19 February 2024 it published an updated draft Code and an explanatory memorandum – these have been presented to Parliament for approval. If approved, the Code will be brought into force by way of statutory instrument.

The Code demonstrates that ‘fire and rehire’ should be a last resort following meaningful consultation with employees or their representatives.

The aim of the code is:

• To improve industrial relations by ensuring that employers consider alternatives to dismissal and re-engagement.

• To prevent or curtail the practice of ‘fire and rehire’ where employees who do not accept new terms and conditions, are dismissed, and then offered their job back on the new terms.

• To crack down on unscrupulous employers, by making it clear that threats of dismissal should not be used.

• To ensure that an employer takes all reasonable steps to consider alternatives to dismissal and carries out consultation in good faith with employees/ representatives.

• To give courts the power to apply a 25% uplift to employee compensation, in the same way as the ACAS Code of Practice is enforced.

• The new code says that employers should contact ACAS for advice before raising the prospect of dismissal and re-engagement. This differs from the previous version, which said that employers should seek guidance from ACAS if they were unable to reach agreement with their employees.

At the time of writing, the code is still expected to apply from 18 July 2024, but further updates are awaited.

The order to implement this code provides a transitional provision, which means it will not apply where the prospect of dismissal and re-engagement has been raised by the employer with either the employee and/or their representatives before the 18 July 2024.