On Tuesday 24th January 2023, the UK Government published the long-awaited draft of its statutory fire and rehire code of practice (the “Code”). The Department for Business, Energy and Industrial Strategy’s (BEIS) code – which is still subject to consultation for the next 12 weeks – has set out employers’ responsibilities when seeking to change the terms and conditions of an employee’s contract. The government has stated that the code aims to avoid a repeat of the case of P&O Ferries’ in 2022, when it sacked 786 seafarers without due consultation – a move that prompted former transport secretary Grant Shapps to introduce a nine-point plan to address the issues. In this post, we look at UK Government Cracks Down on Fire and Rehire – but what does it mean for employers?
What are the implications of the code for employers?
Like other codes of practice in the employment world, it sets out minimum standards of behavior which employers are required to meet. You can have your own policies and procedures, but they must be in line with or in excess of the provisions of the code. Failure to comply with the code will be taken into account by an employment tribunal when considering any claims for unfair dismissal.
The new code will require employers to take a business decision that considers the risk and impact of employees bringing a case against the employer for the change of contract. So when deciding whether to force the changes through with dismissal and re-engage (fire and rehire) strategy, the costs of an employment tribunal, including the cost of defending the case, any awards against them, any costs awarded against them, and the cost of time, stress and reputational damage must all be quantified in the business case to determine whether a fire and rehire approach still outweighs the cost of the changes required by the business which triggered the process in the first instance.
In summary, the proposed initial steps for employers include:
- Employer communicates that it wants to change the terms and conditions in employees’ contracts
- The employer ensures compliance with specific legal information and consultation obligations beyond the scope of the code
- Employees, or representatives of employees, make clear that they are not prepared to accept the changes
- Employer re-examines its plans for changes to employment contracts in light of feedback from the consultation
- The employer considers what information it could share with employees or their representatives, which might help reach a consensus
- Employer consults with employees or representatives
How can fire and rehire be avoided?
An employer may seek to make roles redundant and follow a genuine, robust redundancy process giving employees the opportunity to apply for suitable alternative employment within the business if those roles exist. If the roles don’t exist then the employees may be made redundant and paid redundancy pay in line with legislation.
Changes for new employees
In some cases, it may be possible to bring new employees into a business on different terms and conditions to those the existing employees are on.
How can we help?
The code applies to all businesses, regardless of the number of employees you have within the business.
We hope that you found this post on ‘UK Government Cracks Down on Fire and Rehire – but what does it mean for employers?’ useful. Should you wish to discuss employee dismissal or any other employment law-related matters with our experts, please do not hesitate to contact us here.