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Dismissal and Re-Engagement Code of Practice

Dismissal and reengagement

The Department for Business, Energy and Industrial Strategy (BEIS) has published new best practice guidance on the practice of dismissal and reengagement. A consultation period has opened for a period of 12 weeks, in which it seeks views from employers, professional bodie,s and unions on the proposals set out within “Draft Code of Practice on Dismissal and Re-engagement”.

Dismissal and re-engagement, also known as ‘fire and rehire’ is when an employer dismisses an employee and rehires them on new terms which are generally regarded as less favourable.

This new Code of Practice has largely come about following the unlawful redundancies carried out by P&O Ferries back in early 2022, which saw the dismissal of over 800 employees and the company engaging new employees on less favourable terms to replace them in their roles.

What’s changed?

It is aimed at encouraging both the employer and employee to act reasonably and fairly in the process, as well as when seeking a resolution when a dispute arises, which can sometimes occur, as we have seen in recent years involving other companies, such as British Airways, British Gas and Tesco, to name a few.

Dismissal and re-engagement can have their place in employment, but in the right circumstances and only on following a fair and reasonable process, so this new code is to provide practical guidance to employers on how this can be achieved.

It will apply to all employers, regardless of how many employees are impacted and when:

  1. An employer wishes to make changes to its employee’s contracts of employment;
  2. Where agreement cannot be gained, the employer dismisses them and offers re-employment on new terms or engages new employees to perform the role.

There will not be a legal obligation on an employer to follow the code however, it can be admissible in tribunal proceedings and any award issued can be increased by up to 25% where an employer has unreasonably failed to comply, and similarly, it can be decreased by up to 25% where it is the employee who has unreasonably failed to comply.
There are several important recommendations within the code:

  • An employer to consider its business case in the event that proposals are put forward but agreement cannot be reached.
  • Certain actions when sharing information.
  • When multiple changes are being proposed, the implementation where possible should be over a period of time.
  • For those changes taking place later down the line, then the employer to revisit the business case to ensure that the requirement remains relevant.

You can read the draft code of practice here and contribute to the government’s consultation period by submitting your views online.

The consultation closes April 2023.

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