The government has published a consultation on a draft Statutory Code of Practice on Dismissal and Re-engagement (colloquially known as 'fire and re-hire') which is applicable in the context of changing terms and conditions of employment, to be issued under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. 

The Code sets out a step-by-step process that an employer should follow to explore alternatives to dismissal and to engage in meaningful consultation with trade unions, employee representatives or directly with the affected employees to find an agreed solution. It makes clear that employers should not use threats of dismissal as a negotiating tactic. It also states that, once it is clear to an employer that employees will not accept proposed new terms without negotiation, it should re-examine its business strategy and plans in light of the potentially serious consequences for employees.

 

Under the Code, an employer should not consider unilaterally imposing contractual changes unless it is satisfied that all reasonable alternatives which might result in agreement have been fully explored first. The Code cautions that unilateral imposition will usually be a breach of contract and is likely to have a damaging effect on industrial relations. 

 

The Code treats dismissal and re-engagement as a last resort. Where an employer has participated in a thorough and open information and consultation process, has listened carefully to and explored fully any alternative proposals, and has concluded that it still needs to make changes to employment contracts, it might consider dismissing the employees and offering to re-engage them on the new terms, or engage new hires for the same roles on those new terms. However, in these circumstances, the employer should give as much notice as possible of the dismissals. It should also consider whether any particular employees might need longer notice in order to make arrangements which might better enable them to accommodate the changes. Although the Code will not impose any legal obligations on employers, employment tribunals will be required to take it into account when considering relevant cases. Tribunals will have the power to increase an employee's compensation by up to 25% if an employer has unreasonably failed to comply with Code. 

 

The consultation closes on 18 April 2023. Unions have already stated that the Code does not go nearly far enough and could be largely ignored by employers; employer representatives have expressed concern that it imposes unrealistic expectations upon businesses who may need to act urgently in times of economic strife.