What will the new fire and rehire code of practice mean for employers?

In the wake of scandals such as the P&O Ferries case in 2022, the government has announced a crackdown on firing and rehiring.

That is the practice of dismissing staff one day and rehiring the next on different terms and conditions.

In 12-week consultation period, they are proposing a statutory code of practice by which employers must abide if they want to change contractual terms and conditions of employment. This would compel employers to consult with staff in a transparent and fair manner.

Under the code, should it be ratified in its current guise, an agreed solution must be sought. If agreement cannot be found, the business must actively examine the business case. If there is no other reasonable alternative, then fire and rehire (more formally known as dismissal and reengagement) would still be permissible.

In exploring all reasonable steps, discussions should be made in good faith with individual employees, appointed representatives or trade unions as appropriate. It is important that these are conducted with an open mind to give the talks every chance.

There isn’t a set time period that discussions must last in the current draft of the code, but it suggests a longer consultation would be seen favourably.

Failure to comply with the statutory code of practice would expose you to a potential 25% uplift in compensation if the employee won a case for unfair dismissal.

Is fire and rehire ever legitimate?
The practice of firing and rehiring (dismissal and reengagement) was not invented in 2022 – it has been around for decades. It can be carried out legally if a negotiation to change terms and conditions is first pursued and the original contracts are honoured up to their termination.

When this doesn’t happen then employment claims can be initiated. As we saw in the P&O Ferries case, it can lead to very bad PR whether it goes to court or not, as it is clearly shoddy treatment of a workforce.

Read more and get advice from the HR Dept, Durham. 

What will the new fire and rehire code of practice mean for employers?

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