The statutory Code of Practice on dismissal and re-engagement came into force last month on 18th July.
If a contract change has not been agreed between an employer and its employee(s) then the employer might propose to introduce the change by dismissing and rehiring employee(s). This is known as 'fire and rehire' or 'dismissal and re-engagement'.
This is where an employer gives its employees notice that they propose to:
dismiss employees from their existing contract
offer to rehire them on new terms
Employers need to be aware that they should only do this as a last resort. They should follow the new Code of Practice on dismissal and re-engagement on GOV.UK
The new code of practice aims to tackle the use of 'fire and rehire' as a negotiation tactic to pressurise employees and sets out what employers must do in this situation.
In future, the courts and employment tribunals will take the Code into account when considering relevant cases. This will include on unfair dismissal claims where the employer should have followed the Code.
Employment tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code.
The new Code clarifies how employers should behave when seeking to change employees’ terms and conditions, aiming to ensure employees are properly consulted and treated fairly.
Employers will now also need to explore alternatives to dismissal and re-engagement and have meaningful discussions with employees or trade unions to reach an agreed outcome.
The Code can be found here
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