New rules for ‘fire and rehire’ tactics

The government recently announced that a new Statutory Code of Practice will be introduced with the aim of clamping down on controversial ‘fire and rehire’ tactics used by some employers.

This is where an employee’s contracted is terminated and they are re-hired by the same employer on less favourable terms – and comes after P&O Ferries recently dismissed 800 workers without consultation.

When can ‘fire and rehire’ be used by employers?

‘Fire and rehire’ occurs when an employer terminates an employee’s contract of employment and rehires them on new, often less favourable terms.

‘Fire and rehire’ tactics may be used when employers want to change the terms and conditions of employment. This often happens if a company is experiencing financial difficulties and needs to reduce costs.

‘Fire and rehire’ which is also known as ‘dismissal and re-engagement’ is not a new practice and although it is legally allowed in the UK, it does carry a high risk of legal claims, reputational damage and wider commercial repercussions if not managed or implemented correctly.

A new Statutory Code of Practice will include practical steps that employers should follow and will detail how businesses must hold fair, transparent and meaningful consultations on proposed changes to employment terms and will clarify and give some legal force to government expectations.

The proposed new Code of Practice comes after P&O Ferries dismissed 800 workers without consultation, with the government stating they recognise the need for greater clarity for employers when dismissing employees and changing employment terms.

A court or employment tribunal will take the code into account when considering relevant cases, including unfair dismissal.

The courts will have the power to apply an uplift of up to 25 per cent of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.

Employers have the option to change the contractual terms and conditions of their employees in one of three ways: Varying the contract of employment with consent; Variations permitted within existing contractual terms; Unilateral variation of contract without consent.

Full details of the code, including when it will be published, are still awaited. For all the latest business news visit:www.peterboroughtoday.co.uk