Statutory Code of Practice on Dismissal and Re-Engagement

Statutory Code of Practice on Dismissal and Re-Engagement

The UK government has introduced a statutory code of practice aimed at regulating dismissal and re-engagement practices, commonly referred to as “fire and rehire.” This practice involves employers dismissing employees and subsequently offering to rehire them under less favorable terms and conditions. The code came into effect on 18 July 2024.

Key Aspects of the Code:

1. Purpose and Scope:
   • The code provides guidelines to ensure that any changes to employment terms are conducted fairly and transparently, minimizing the need for dismissal and re-engagement strategies.
2. Consultation Requirements:
   • Employers are obligated to engage in meaningful consultations with employees and their representatives when proposing changes to employment terms. This includes sharing relevant information and considering alternative solutions to avoid dismissals.
3. Fair Selection Process:
   • If dismissals are unavoidable, employers must implement fair and objective selection criteria to determine which employees are affected, ensuring non-discriminatory practices.
4. Alternative Employment:
   • Employers should explore and offer suitable alternative employment within the organization to affected employees before proceeding with dismissals.
5. Notice and Redundancy Pay:
   • Affected employees are entitled to appropriate notice periods and redundancy payments as stipulated by law.
6. Right to Appeal:
   • Employees have the right to appeal against dismissal decisions, and employers must have a clear and accessible appeals process in place.
7. Good Faith Negotiations:
   • Both employers and employees are encouraged to negotiate changes to employment terms in good faith, aiming to reach mutual agreements without resorting to dismissals.
8. Tribunal Compensation Uplift:
   • Failure to comply with the code can have serious financial consequences for employers. Employment tribunals have the power to increase an employee’s compensation by up to 25% if an employer unreasonably fails to follow the code. This uplift applies to claims such as unfair dismissal, unlawful deduction from wages, detriment, and discrimination, though it does not apply to protective awards in collective redundancy cases. The tribunal compensation uplift came into effect on 18 July 2024.

Adherence to this code is crucial, as employment tribunals may take it into account when assessing the fairness of dismissals related to changes in employment terms. Non-compliance could result in findings of unfair dismissal and potential compensation awards to affected employees.

This code is part of broader efforts to enhance workers’ rights in the UK, including measures to ban exploitative practices and improve job security.