The controversial practice of ‘dismissal and re-engagement’ (aka ‘fire and rehire’) has proved to be a political ‘hot potato’ in recent years. So what are we to make of the Government’s recently published draft code of practice’?

What’s it all about?

In the last few years, both Conservative and Labour politicians have condemned the practice of dismissing and re-engaging employees. Why do employers want to dismiss and re-engage? Normally, it is because the employer wants to change key terms of the contract of employment, but has been unable to convince the employees voluntarily to agree. In such circumstances, exceptionally, an employer may decide to dismiss all of the relevant employees, albeit offering to re-engage them on a new contract containing the new and updated terms.

The use of ‘dismissal and re-engagement’ has been publicly criticised in various cases over the last few years, particularly when utilised by large well-known employers such as British Airways and British Gas. In truth, the practice is relatively uncommon; not least because of the considerable legal risks that typically arise out of its use. Yet there seems to be a prevailing wisdom that employees are insufficiently protected from high-handed employers who might otherwise use the practice. With this in mind, the Department for Business, Energy and Industrial Strategy has recently published a draft code of practice on ‘dismissal and re-engagement’, inviting feedback from interested parties as part of a public consultation exercise.

If the code of practice is ultimately introduced, it will apply to employers of all sizes and to all ‘fire and rehire’ situations, regardless of the number of employees affected. For those employers who have been well-advised by their lawyers, the code of practice arguably adds relatively little. For those unaware of their existing obligations under the laws relating to collective consultation and unfair dismissal, the code of practice provides a useful reminder of an employer’s obligations in cases such as these.

Once introduced, if an employee successfully brings a claim against an employer in relation to a ‘dismissal and re-engagement’ situation, a failure to follow the code of practice could result in the employee’s compensation being increased by as much as 25%.

Want to take a look? 

If you are interested in reading the draft code of practice, you can find it via the link below:

https://www.gov.uk/government/consultations/draft-code-of-practice-on-dismissal-and-re-engagement 

Want to know more

If you want to hear us talking about this issue in a little more detail, then sign up for our Employment Law Update Seminar on 30 March 2023. Email us at employment@stevensdrake.com to book your place.