On 29 March 2022, the government announced that a new Statutory Code of Practice will be published on the use of "fire and rehire" practices to bring about changes to employees' terms and conditions. This is one of nine measures which was proposed to protect seafarers' rights in light of the recent mass redundancies by P&O Ferries which took place without prior notice or consultation but has also been a controversial topic of debate for some time - including in respect of British Airways' approach to their employment contracts for many staff, when the pandemic began.  

 

Further to the announcement of the new Statutory Code of Practice, Paul Scully MP, Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (BEIS), has responded to written questions from Labour requesting details of the consultation plans and timescales for the code to come into force. 

 

Mr Scully confirmed that a draft of the Statutory Code of Practice on dismissal and re-engagement will be published and representations, including from trade unions, will be considered in accordance with section 204 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). He also confirmed that the scope of the code and remedies for breaches of it will be in accordance with TULRCA. Under section 207 of TULRCA, tribunals and courts will be required to take the code into account when considering relevant cases. Under section 207A, they will have the power to apply an uplift of up to 25% of an employee's compensation where the code applies and the employer has unreasonably failed to follow it.  In many ways, given this proposal would essentially only enhance compensation for a dismissed employee (in the same way an employee dismissed for a disciplinary matter unfairly and without the relevant Code of Practice being followed by the employer can obtain an uplift in his or her compensation) employers are not being legally prevented from using the "fire and rehire" practice at all -  but they risk being exposed to increased compensation if they are found to be in the wrong by a Tribunal.  

 

Mr Scully further confirmed that legislation to lay the code will be introduced "when parliamentary time allows".

 

Currently, non-statutory advice published by Acas in November 2021 suggests that employers should fully consult their workforces and make every effort to reach agreement on any contract changes, noting that fire and rehire is an extreme step that can damage staff morale, trust, productivity and working relations.  It remains to be seen whether this proposed Statutory Code of Practice will see the light of day, when it does and if in reality it makes much difference at all in any event.