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On 18 July 2024, the statutory Code of Practice on Dismissal and Re-engagement (also known as fire and rehire) came into force.
The final Code is very similar in substance to the draft version that was published by the previous Conservative government in February 2024, the purpose being to provide practical guidance on avoiding, managing and resolving conflicts resulting from the practice of dismissing and re-engaging employees as a means of changing terms and conditions of employment. For further information on the provisions of the Code, please click here for our previous update.
While a failure to follow the Code does not give rise to freestanding liability, the Code will be taken into account by employment tribunals and courts in relevant proceedings (e.g., unfair dismissal claims). Failure to follow the Code could therefore increase the risk of a finding of unfair dismissal if employees are ultimately dismissed as part of the procedure. A Tribunal may also adjust any award it makes by up to 25% if either party failed to comply with the Code.
However, a failure to follow the Code will not give a Tribunal the power to apply an adjustment in compensation for collective consultation claims. The previous Conservative government had published draft legislation to provide for this but the Order was not approved by the House of Lords before the general election on 4 July 2024 and therefore fell away.
The new Labour government has committed to ending "fire and rehire" practices except where there is genuinely no alternative option. Their manifesto commits to replacing the Code, which it describes as "inadequate" with a strengthened code of practice as well as reforming the law to provide effective remedies against abuse. Therefore the Code is likely to prove short-lived and it will be interesting to see how this area of law develops.
Code of practice on dismissal and re-engagement issued by the Secretary of State under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992 - GOV.UK (www.gov.uk)
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