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New Government Code of Practice on Fire and Rehire – a “bad joke” or a serious measure?

February 27, 2024

Last week, the government issued a draft new Code of Practice on dismissal and re-engagement (or as it has been more commonly labelled “fire and re-hire”).  You can read the Code here.

Calls had been made for the government to take steps to restrict – or even outlaw – the practice of firing and rehiring employees on inferior terms and conditions after the P&O Ferries scandal in March 2022, where nearly 800 employees were sacked without consultation and replaced by agency workers.

Given the worldwide interest and condemnation from bodies like the International Labour Organisation, of the UK government’s failure to prevent the practice with harsh sanctions for businesses, the creation of new guidance was always on the cards. However, what new duties does the Code impose on an employer considering dismissal and re-engagement, and what penalties will it put in place for failure to comply?

Sadly, for employees, the answer is not a whole lot.

At paragraph 12, it outlines that “A failure to follow the Code does not, in itself, make a person or organisation liable to proceedings”. At paragraph 15 it outlines, “Where this Code states that a party “should” or should not do something, this indicates a recommendation…”. This seems to be the attitude throughout the document, where opportunities to implement strict procedural guidance are weakened into recommendations, like at paragraph 16 where its states, “Even where the employer considers that the employees and/or their representatives are unlikely to agree to the proposed changes, the employer should consult for as long as reasonably possible in good faith”.

Rather than implementing any direct measures to punish “unscrupulous” employers, the new guidance instead warrants at paragraph 14 that, “…the tribunal can: increase any award it makes by up to 25%, if the employer has unreasonably failed to comply with the Code; or reduce any award by up to 25%, where it is the employee who has unreasonably failed to comply.”  This will be familiar to many as it is very similar to how the ACAS Code of Practice on Discipline and Grievance operates.

The Secretary General of Unite Union has already labelled this tentative step as a “bad joke”. However, from the employer’s point of view, it provides scope for dismissal and re-engagement to remain an accepted method of dealing with any potential serious economic downturn. So long as the procedure is in line with what is deemed as reasonable by the employment tribunal.

The new Code is now to be approved by both Houses of Parliament and will likely be brought into effect this year. However, as alluded to by my colleague, Jack, in his blog on potential new changes in Employment Law, should Labour win the next general election, they have promised to make the practice of firing and re-hiring unlawful. You can read his blog here. With the future of the country up for debate this year, there is a possibility that the legality of fire and rehire will continue to be a topic of deep discussion within the workplace and within the House of Commons for years to come. Our advice remains that if an employer wishes to change the terms and conditions of its staff, seeking to do so by agreement or with consultation is the best approach and fire and re-hire would always be a last resort.

If you have any questions on this on any other area of Employment law, please get in touch with Blackadders Employment Team, working in Aberdeen, Dundee, Edinburgh, Glasgow and across Scotland.

The opinions expressed in this site are of the author(s) only and do not necessarily represent the opinions of Blackadders LLP.

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