Statutory Code of Practice on Dismissal and Re-Engagement

To make changes to employment contracts both employer and employee must agree to vary the terms which will likely include a process of consultation with individuals or under the framework of a collective agreement. If agreement cannot be reached after a number of attempts it may sometimes be possible to introduce a change via a process of ‘Dismissal and Re-Engagement’.

The briefing notes of the Employment Rights Bill following the King’s Speech, delivered on 17th July 2024, briefly detailed the plan to reform the law and strengthen the Statutory Code of Practice on Dismissal and Re-Engagement commonly known as ‘fire and ‘rehire’. This Statutory Code contains guidance on the process of Dismissal and Re-Engagement in relation to proposed changes to employees’ terms and conditions.

To this end, on Thursday 18th July 2024 and under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992, the Statutory Code of Practice on Dismissal and Re-Engagement came into force in an attempt to promote the improvement of industrial relations.

This Statutory Code of Practice will be more commonly known as the Code of Practice on ‘fire and re-hire’ and outlines the expected practices and guidance. We will need to take heed to this as Labour has pledged to end ‘fire and re-hire’ which may, in upshot, revise the Code again.

Under this Statutory Code of Practice, a tribunal will have the ability to uplift compensation by up to 25% if an employer unreasonably fails to follow it, thus it will be important to take the Code into account whenever an employer finds themselves in such position.

The key provisions that are set out within the Code include:-

• Fire and re-hire should only be used as a last resort and employers should explore any alternatives before proceeding;

• There is a requirement to consult with the relevant parties as detailed within the Code but there is no time period stipulated. Consultation should be for as long as reasonably possible with a view to reaching an agreed outcome. Employers should contact ACAS at an early stage before raising the prospect of dismissal and re-engagement;

• Dismissal should not be threatened if it is not actually envisaged. This should also be noted whenever new terms and conditions are being considered for signature;

• Where proposed changes are not agreed, an employer should consider feedback and re-examine them in good faith with a view to reaching an agreed outcome;

• Where changes are agreed, it will be seen as good practice for an employer, giving as much notice as is reasonably practicable, to communicate the changes to affected employees in writing, clearly setting out when the changes will come into effect;

• Where it has not been possible to reach an agreed outcome, employers will need to consider contracts of employment and their position carefully, prior to implementing any unilateral changes.

A link to the full Statutory Code can be accessed here

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