The practice of ‘fire and rehire’ gained attention in 2022 when P&O Ferries dismissed around 800 employees without consultation. ‘Fire and rehire’ means when an employer dismisses an employee, and then immediately rehires them (or a different employee altogether) on less favourable terms to the employee’s original contract.
The new Code of Practice, which is expected to come in later this summer, aims to provide guidance to employers of what to do when they wish to change an employee’s terms of employment.
The Code of Practice provides that employers must:
- Begin by clearly communicating to the employee the intention to modify terms;
- If faced with employee resistance, reassess the business strategy driving the proposed changes;
- Engage in a meaningful consultation with the employee, avoiding the use of dismissal as a negotiation tactic;
- View dismissal and re-engagement as a last resort, ensuring ample notice and support are provided to affected employees; and
- Even after issuing notice, consider adjustments and support employees through a phased implementation.
If an employer fails to comply with the code, an employment tribunal can apply a compensation uplift of up to 25% for claims such as unfair dismissal. The government has currently not suggested any plans for a standalone claim against the practice of fire and rehire.
This is therefore an important reminder for employers to ensure that a fair process is followed when deciding to dismiss an employee, or when changing an existing employee’s terms and conditions.
If you would like more information or any assistance, please contact the Employment Team at employment@glaisyers.com.
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