The recently superseded Department for Business, Energy and Industrial Strategy (BEIS) published a consultation in late January on a draft Code of Practice intended to protect employees in the event of certain changes to their terms and conditions of employment. The proposed rules would apply in cases where there is the prospect of dismissal and re-engagement and are intended to discourage employers from threatening so-called fire and rehire arrangements as a negotiating tactic to pressure employees into accepting revised employment terms.  

The draft Code of Practice (‘the Code’) aims to ensure employers consult with employees in a fair and open manner when any attempt is made to alter their employment terms. It also seeks to encourage employers to take all reasonable steps to explore alternatives to dismissal. The press release accompanying the consultation refers to the actions of P&O Ferries in 2022 as being a contributing factor in the Government’s actions to clamp down on fire and rehire tactics. That case followed media coverage of several instances of fire and rehire during the pandemic as employers reacted to uncertainty by trying to cut costs.  

Subject to the consultation, in the event a former employee successfully claims unfair dismissal, employers could be forced to pay up to an additional 25% of the agreed compensation payment in situations where they are shown not to have complied with the Code. Employees (and/or their representatives such as Trade Unions) would also be obliged by the Code to act in good faith. Where they fail to do so, any agreed compensatory award could be reduced by up to 25%. 

Employers and any other interested parties are encouraged to respond to the consultation before 18 April 2023.   

 

This article reflects the position at the date of publication (21 February 2023). If you are reading this at a later date you are advised to check that that position has not changed in the time since.    

 

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