Controversial ‘fire and rehire’ employment practices will be blocked under a new statutory Code of Practice for businesses.
‘Fire and rehire’ refers to the practice when an employer dismisses and employee in order to re-engage them on a new contract, typically for the purposes of introducing less favourable terms for the employee.
The new Code of Practice sets out how businesses should behave when seeking to change employees’ terms and conditions, aiming to ensure employees are properly consulted and treated fairly.
Employment tribunals will take the Code into account when considering relevant cases, including unfair dismissal claims. They have also been given the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply.
Business Minister Kevin Hollinrake said:
“Our new Code will crack down on employers mistreating employees and sets out how they should behave when changing an employee’s contract.
“This announcement shows we are taking action to tackle fire and re-hire practices by balancing protections for workers with business flexibility.”
Principal Policy Advisor at Institute of Directors, Alexandra Hall-Chen said:
“The publication of this Code of Practice provides employers with welcome clarity and practical guidance.
“The Code rightly places good industrial relations at its core and represents an effective means of balancing worker protections with labour market flexibility.“
Head of Public Policy at CIPD, Ben Willmott said:
“The Code promotes good practice, making clear employers should always seek to agree any changes to terms and conditions with employees and that ‘fire and rehire’ should only be used as an absolute last resort.
“It highlights the importance of early and meaningful consultation with employees to maximise the chances of finding alternative solutions which can lead to agreement over proposed changes.
“It also emphasises that Acas has a key role to play and should be contacted by an employer for advice before it raises the prospect of fire and rehire with the workforce.“
A draft Code of Practice was drawn up Acas following instruction from government in 2021, which then underwent a 12 week open consultation. The Code of Practice is expected to take effect in summer 2024 following approval in Parliament by both Houses.