Dismissal And Re-engagement
Statutory Code Of Practice On Dismissal And Re-engagement
This page was first published on 23 July 2024, the latest update was on 29 October 2024.
The Statutory Code Of Practice On Dismissal And Re-engagement, otherwise known as “fire and rehire” came into force on 18 July 2024. The new Statutory Code Of Practice On Dismissal And Re-engagement does not seek to prohibit the practice as a whole. Instead, it looks to find a balance between flexibility and worker protection, focusing on consultation with employees and requiring employers to explore all other alternatives before turning to dismissal and re-engagement which should be the last resort. During consultation with their employees, employers must be mindful not to raise the prospect of dismissal unreasonably early or use the threat of dismissal as a negotiating tactic to put undue pressure on employees in circumstances where dismissal is not actually envisaged.
Changes Due Via The Employment Rights Bill
The Employment Rights Bill will make the practice of dismissal and re-engagement and dismissal and replacement only applicable in the where the business is at risk of financial collapse. Dismissals will be automatically unfair where the reason for the dismissal relates to dismissal and re-engagement or dismissal and replacment. Scroll down to ‘Changes Under The Employment Rights Bill’ for more information.
What Is Dismissal and Re-engagement?
When an employer is attempting to change the terms and conditions it provides to employees discussions can often breakdown. In these circumstances the employer sometimes resorts to dismissing the employee and offering them a new contract of employment on the terms and conditions they were attempting to negotiate on. The employee can refuse to accept the offer and can then claim unfair dismissal.
Dismissal and Replace occurs when the employer dismisses the employee and offers the job to a new employee; generally the terms and conditions offered to the new employee are less favourable to the original terms.
Key Points Set Out In The Statutory Code Of Practice
The Statutory Code Of Practice On Dismissal And Re-engagement explains how employers must behave when they are seeking to change an employee’s terms and conditions of employment and are considering dismissal and re-engagement if the employee does not agree to the change.
- Employers must consult with the employee for as long as reasonably possible (although there is no minimum time period for the consultation process)
- The consultation must explore any alternatives to Dismissal And Re-engagement, and should be meaningful and with a view to reaching an agreement
- The threat of dismissal must not be used a negotiation tactic to pressurise employees into accepting the new terms, or where dismissal is not actually being envisaged
- Dismissal And Re-engagement should only be used as a last resort
- Employers should contact ACAS for advice before raising the prospect of Dismissal And Re-engagement with their employees (although ACAS can be contacted wherever the code applies)
- The code of practice will apply regardless of the number of employees potentially affected by the proposals, or of the employer’s reasons for seeking to change the terms and conditions of employment
- The code will not apply where an employer is only envisaging making employees redundant; however, it will apply where an employer is considering both redundancy or Dismissal And Re-engagement as potential options for the same employees
An employer’s failure to follow the Statutory Code Of Practice On Dismissal And Re-engagement will not give rise to a standalone claim. However, if an employee successfully brings another relevant claim (such as for unfair dismissal) and the employer has unreasonably failed to follow the Code, the compensation may be increased by up to 25%.
Changes Under The Employment Rights Bill
The intention is to improve information and consultation procedures, to make employers consult with their workforce and reach agreement about contractual changes and to prevent workers being dismissed for failing to agree to a worse contract.
Automatic Unfair Dismissal
Automatic Unfair Dismissal will apply where an employer dismisses an employee and the reason for the dismissal was either:/p
- that the employee refused to accept a variation to their terms and conditions of employment. OR
- to enable the employer to re-engage the employee or replace them with another individual to carry out substantially the same duties on different terms and conditions of employment.
This means where an employer is attempting to harmonise terms and conditions or negotiating a reduction in a particular benefit and talks break down dismissing the employees will be automatically unfair.
Limited Exception
The new regime assumes the employer is trying to avoid bankruptcy. Meaning the only situation where a dismissal and re-engagement would be lawful is if the reasons for the variation were to avoid imminent collapse of the business.
Even if the employer can show the limited exception applies the tribunal would still go on to consider whether the dismissal was fair in all the circumstances. This would involve considering whether consultation took place and what, if anything, was offered as an incentive to accept the varied terms.
Consultation
This consultation asks for views on measures to strengthen the protections for employees whose employer fails to consult during redundancy or dismissal and re-engagement practices.
Protective Award
Where employers do not comply with the consultation obligations, the employee is able to make a claim to an Employment Tribunal, which may make a protective award of up to 90 days’ pay to each affected employee. The questions relate to the maximum period of the protective award that a tribunal can award.
Interim Relief
Employees who submit a tribunal claim for unfair dismissal can request an interim relief order. If successful the tribunal would issue an order for the employer to re-instate the employee pending the final hearing; or, if the employer is unwilling to re-employ them, to continue to pay the employee their wages and benefits until the full hearing. Views are sought on whether interim relief should be available to employees who:
- bring claims for the protective award.
- bring an unfair dismissal claim under the new right which will be introduced by the Employment Rights Bill (at day one of employment)
The consultation is open until Monday 2 December 2024.
Responding To The Consultation
If you would like to respond personally click the button below and scroll down to Your Views and How to Respond. Alternativel send your views to me and I will respond on your behalf (Please put Dismissal and Re-enangement Consultation in the subject line of your email).
Flexibility Clauses in Contracts of Employment
As the exception is so limited there will be increased reliance on flexibility clauses within the contract of employment. My recommendation is to review your contracts now to consider where flexibility and variations may be required and write in, where possible, that variations can be introduced without the need to consult and obtain consent.
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