Employment & Pensions Blog: The Dismissal and Re-engagement Code of Practice comes into force on 18 July 2024

An Order was recently made to bring the statutory Code of Practice on Dismissal and Re-engagement (the Code) into force on 18 July 2024. This blog is a helpful reminder for employers in understanding the Code and what this will mean for them in practice.

Background 

The concept of dismissal and re-engagement (which is also commonly referred to as 'fire and re-hire') was brought to the attention of the media following P&O's dismissal of around 800 employees without consultation. This along with ACAS' advice and concerns prompted the Government to conduct a consultation which resulted in this statutory Code being published. The aim of the Code is to provide practical guidance to employers when they are considering making changes to employees’ terms and conditions, where they are intending to dismiss and re-engage employees to implement the changes. It is also very clear in the Code that dismissal and re-engagement should only be used as a last resort, and forces employers to adequately consult and consider alternatives to dismissal, in a bid to ensure that employees are properly consulted and treated fairly. 

The Statutory Code of Practice 

The Code does not make it illegal for employers to dismiss and re-engage employees. However, it does provide strict considerations that employers must follow, which apply regardless of the number of employees affected. We have listed some of the key considerations below: 

• Employers should consult for as long as reasonably possible in good faith, with a view to reaching an agreed outcome; 
• Employers must not make a direct offer to an employee, where there is a recognised trade union, if that offer relates to a matter falling within the scope of the collective bargaining agreement (unless the collective bargaining procedure has already been exhausted); 
• Employers should share all information with employees as soon as reasonably possible so they can understand the proposed changes, and to allow the consultation process to be more productive and make reaching an agreement more likely; 
• Employers should not threaten dismissal as a negotiating tactic to put undue pressure on employees if the employer is not envisaging dismissal being an option. However, if the employer is considering this as an option, they should be clear about that; 
• Employers must, if they opt for dismissal and re-engagement, give as much notice as reasonably practicable of the dismissal, dismiss the employee fairly following a fair procedure and re-engage the employee as soon as reasonably practicable. Employers are advised to contact ACAS for advice before opting for this option; and
• Employers must, if changes to an employee's terms and conditions have been agreed, give employees a written statement of change within one month of the new terms taking effect.

Impact on Employers 

If an employee brings a claim in the Employment Tribunal and the Tribunal finds that an employer has unreasonably failed to follow the Code, they can increase any compensatory award by a maximum of 25%. It should be noted, however, that this only applies to claims listed within the Code. 

Although not specified in the Code, it is important to note that the Code will not apply if the prospect of dismissal and re-engagement has been raised by the employer with either the employee and/or their representatives before 18 July 2024. Therefore, employers anticipating projects where they may need to go through dismissal and re-engagement, may consider bringing this forward to implement it before 18 July 2024. 

Comment 

It is clear from the Code that its purpose is to prevent employers dismissing and re-engaging employees, unless absolutely necessary. Employers are therefore encouraged to be as clear as possible about the objectives and nature of the proposals, engage openly and in good faith, consider requests for further information and genuinely consider alternative proposals put forward. It would also be good practice for employers to provide information in writing, but also consider the style of communication used to avoid employees feeling excluded. To prevent claims in the Tribunal, once the Code comes into force, employers should avoid using this process unless they have genuinely taken all reasonable steps to explore alternatives to dismissal and have a justifiable reason for dismissing and re-engaging employees and have adequately documented their process.

For more information, please contact a member of our Employment Team.