The Statutory Code of Practice on Dismissal and Re-engagement (“Fire and Rehire”)

The Statutory Code of Practice on Dismissal and Re-engagement, or “Fire and Rehire”, came into force on 18 July 2024. The Code sets out new responsibilities for employers seeking to change contractual terms and conditions of employment. It also seeks to ensure that fire and rehire practices are only used as a last resort.

What does the introduction of this Code into employment law mean for employers? Steph Marsh, Head of Coodes’ Employment team, explores.

The Code of Practice on Fire and Rehire

When it comes to the Code of Practice on Fire and Rehire, there is no standalone claim for breach of its provisions. The new Code will need to be taken into account by Employment Tribunals in relevant cases including unfair dismissal.

Tribunals are given the ability to uplift compensation by up to 25% if employers fail to follow the Code’s provisions. The uplift cannot be applied to protective awards for failure to inform and consult in collective redundancy situations.

The Code may not be in force in its current form for very long in light of the Labour Party’s pledges to “end fire and rehire” practices and to replace and strengthen the Code by:

• Introducing stricter processes around the “fire and rehire” practice to stop employers from dismissing workers and offering to re-engage on new and usually more unfavourable terms.
• Making the terms stronger and requiring employers to have more than a “substantial reason” to make any changes to terms and conditions of employment.

What are the key provisions of the Code?

• Fire and rehire should only be used as a last resort.
• A requirement to consult “for as long as reasonable possible”. However, there is no minimum time period (unlike collective redundancy consultations).
• Employers would be required to contact ACAS at an early stage, before they mention fire and rehire to employees.
• Employers would be expected to explore alternatives to fire and rehire.
• Employers should take into account feedback from employees. Once it has transpired that the proposed changes are not agreed upon, they should re-examine them.
• If dismissal is not actually envisaged, employers should not threaten it.
• Employers cannot use threats of dismissal as a way of coercing employees into signing new terms and conditions.
• Employers might commit to reviewing the changes at a set time in future and reconsider if they are still necessary. If multiple changes are to be implemented, there would be an option to introduce them on a phased basis as opposed to all at the same time.

Next steps for businesses

Despite the Code’s likelihood to change under a Labour government, it is still important for businesses to stay up to date. Labour’s Employment Rights Bill (expected in October 2024) will likely introduce a lot of changes to the Code.

Coodes Solicitors are available should you have any questions about The Code of Practice on Dismissal and Re-engagement (Fire and Rehire). As one of the South West’s longest established and leading law firms in Cornwall and Devon, we support businesses in keeping to date with the most recent changes in employment law.

If you need some friendly advice, call Steph Marsh on 01579 324017 or send an email. Alternatively, you can use the contact form on our website.