Government Guidance on Fire and Rehire
The new draft Code of Practice sets out best practice for employers seeking to impose changes to terms and conditions by dismissing and re-engaging employees.
The Government’s Department for Business, Energy and Industrial Strategy (BEIS) has published a draft Code of Practice on Dismissal and Re-Engagement. The draft Code of Practice is intended to set out good industrial practice for employers looking to negotiate or impose changes to their employees’ terms and conditions, particularly where this involves the threat of dismissing and re-engaging those employees who refuse to accede to those new changes.
“Fire and rehire”, as it has become known, is the process of dismissing an employee and rehiring them on different, often less favourable, terms. Provided fire and rehire is handled with care, it is not inherently unlawful; but employers must still ensure that they follow a fair dismissal process (including offering a right of appeal) and give employees their due notice. ACAS describes fire and rehire as an option of last resort, and the new BEIS Code of Practice adds further hoops for employers to jump through when dismissing and re-engaging employees.
Among these, the Code includes a requirement for full and meaningful consultation with the employer’s workforce and any applicable unions. Where there is an impasse over proposed changes to terms and conditions, the Code recommends that employers re-examine their business strategy. It also recommends that, where an employer is seeking to implement multiple changes to terms and conditions, they should look to implement these over a period of time. The reasoning behind making changes should also be kept under continuous review, so that the original terms and conditions can be reintroduced if the reason for changing them in the first place becomes irrelevant.
If an employer fails to comply with the Code in dismissing an employee who does not agree to contractual changes, this will be taken into account in any unfair dismissal claim when determining whether a fair process was followed. An unreasonable failure to comply with the Code can result in an uplift of up to 25% in the award granted to the employee.
While the draft Code provides employers with sensible guidance for managing the imposition of changes in terms and conditions, it also empowers employees to resist such changes, and is likely to slow the process for businesses looking to amend their employment terms across the organisation.
If you would like advice on changing your employment terms or dismissing an employee, please get in touch at [email protected]