Legal development

Fire and rehire an absolute last resort

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    The Government has commenced a consultation for the statutory Code of Practice on Dismissal and Re-engagement.

    Following high-profile criticism of some employers, the Government is looking to 'crackdown' on employers using controversial employee dismissal tactics. The Code advises that employers should be providing information to employees, engaging in meaningful consultation and exploring alternatives, with dismissal and re-engagement being a last resort.

    The consultation closes on 18 April 2023, with the Code implemented when Parliamentary time allows.

    What is the purpose of the Code?

    • The draft Code aims to provide practical guidance where an employer:
      • decides it may want to amend employee terms and conditions; and
      • envisages that, if an employee does not agree to such amendments, it might dismiss them and either offer them re-employment on new terms or engage a new individual to fulfil the role.
    • The Code does not apply in a redundancy scenario, where relevant collective consultation obligations may be separately triggered.
    • The Code applies regardless of the numbers of employees affected by the proposed changes.

    What does the Code advise?

    • The Code stresses the importance of an employer's continuous information and consultation obligations. Even where agreement is unlikely, the employer should continue to consult and negotiate for as long as possible in good faith in order to try to seek a resolution.
    • Employers should share as much information as is reasonably possible and as early into the process as possible to facilitate meaningful consultation (including in respect of the nature of the proposals and the business reasons / rationale for the changes).
    • No minimum consultation timeline is given, and there is no requirement to elect employee representatives (employees can be consulted individually), but the Code envisages a need for 'in-depth discussion' with employees to give them a deep understanding of the proposals.
    • Threats of dismissal should be avoided as a negotiating tactic and 'firing and re-hiring' should be seen as the last resort, when all other alternatives have been exhausted. Where an employer proceeds, it should give as much notice as possible of the dismissal, and consider whether certain employees might need longer notice in order to accommodate the changes.

    What are the risks for employers?

    • The Code itself imposes no direct legal obligations on an employer, but a tribunal may adjust compensation by up to 25% for certain successful employment claims to reflect unreasonable non-compliance with the Code.
    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.

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