Government consults on "fire and rehire"
Tuesday 31st January 2023
The Government is consulting on a statutory Code of Practice on Dismissal and Re-engagement, commonly known as “fire and rehire”. This consultation comes after P&O Ferries dismissed approximately 800 employees in 2020 without any consultation. The Government considers that the practice of “fire and rehire” creates legal and reputational risks for employers; is harmful to the interests of employees; and can lead to disengagement and industrial conflict. The stated purpose of the Code is to provide basic practical guidance on avoiding, managing and resolving conflict and disputes which can arise when employers want to change terms and conditions of employment.
ETs will be required to take the Code into account in any relevant proceeding, with the power to adjust compensation by up to 25% in the event of unreasonable non-compliance by either the employer or employee. The Code will apply when an employer wants to make changes to contracts of employment and envisages that, if not accepted, it might dismiss employees and either offer them re-employment on the new terms or engage new employees or workers to carry out the relevant roles on the new terms. The Code sets out the steps employers should take when they want to make changes to terms and conditions, making clear that threats of dismissal should not be used as a negotiating tactic.
The Code emphasises the importance of providing information to and consulting with employees or their representatives, including complying with all specific legal information and consultation obligations which may apply. Given the serious consequences for employees, the Code requires employers to re-examine its business strategy, along with considering alternative ways to achieve the same objectives, if it becomes clear that the employees will not accept the new terms without negotiation.
The Code makes clear the consultation is an ongoing process and not a one-off event and it is important for employers to ensure consultation is meaningful by providing as much information as possible to help employees understand the objectives and proposals. A longer consultation period is unlikely to be considered detrimental and the Code makes this clear.
An employer may consider dismissal and re-engagement as a last resort, but only where it has participated in a thorough and open information and consultation process and has listened carefully to and explored fully any alternative proposals. In such circumstances employees must be given as much notice of dismissal as possible and employers should consider whether particular employees might need longer notice in order to make arrangements (e.g. childcare) which might better enable them to accommodate the changes.
Further details of the proposals can be found here:
The consultation closes on 18 April 2023.
All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.