The act of dismissal and re-engagement, more commonly known as fire and rehire, is a practice undertaken by employers when they are unable to reach an agreement on changes to employment contracts.
This grants the power for employers to dismiss staff and re-engage them with new contracts with their desired changes.
The Government has revealed a new draft Code of Practice (the Code), changing the guidance on fire and rehire for employers.
The Code sets out what is expected of employers if they decide to make changes to their employee’s contracts and eventually engage in dismissal and re-engagement proceedings.
This should follow the process of:
This Code is for guidance but may also be used by employees who feel that they have been treated unfairly.
If you as an employer are found to have breached the Code, you could face penalties at an employment tribunal.
In part of the Government’s move to discourage fire and rehire practices, one of the main points highlighted in the Code of Conduct is to find alternative arrangements.
This means that if you are looking to change an employee’s contract, you must only use dismissal and re-engagement as a final resort.
Failure to explore alternatives could result in employees claiming that they have been unfairly dismissed.
As part of the Code and any dismissal and re-engagement practices, you must engage in a consultation with your employees and their representatives as soon as you make the decision to change employment contracts. This should include any trade unions that your staff are members of.
There is no set timeline for the length of the consultation, but it is advised that you consult for a substantial period. This allows for time to come to a potential agreement, as well as ensuring compliance.
As part of the consultation, you must share information with your staff as early as possible. This includes:
You should also let your employees know that you intend to engage in dismissal and re-engagement practices if it looks like an agreement may not be reached.
You may still engage in fire and rehire practices if no agreement can be reached. However, the Code sets out the best practice for doing so. This includes:
Whilst the Code is set to come into force officially during summer, it is best to adapt your practices now to ensure compliance.
Failing to comply with the Code could lead to your business being taken to an Employment Tribunal. If you are found to have not followed the Code, the Tribunal can increase the award by up to 25 per cent.
It is best to talk to a legal expert to ensure that you are not breaching the law when looking to change your employment contracts.
If you need help with your employment contracts, get in touch with our team today.
Assistant Solicitor
