Government publishes response to consultation on ‘fire and rehire’ Code of Practice

Following the consultation on the draft statutory Code of Practice on Dismissal and Re-engagement, otherwise known as ‘fire and rehire’, the government has published its response. A revised draft Code has been prepared, along with an explanatory memorandum, for parliament to approve. It is anticipated the Code will come into force in the summer.

Background

Prompted by the high-profile, mass-dismissal of hundreds of workers by P&O Ferries, on 24 January 2023, the Government launched a consultation on the proposed implementation of a draft, statutory ‘Code of Practice on Dismissal and Re-engagement’ (the “Code”). Our note on the consultation can be found here.

The purpose of the Code is to ensure that employers act reasonably and consider alternatives to dismissal where possible. It emphasises the importance of a “meaningful” consultation between employers and employees – or their representatives or trade unions, as the case may be.

The government has now published its response to the consultation and has made various amendments to the draft Code.

The government’s response

The government is clear in its response that the Code should be followed by employers regardless of the number of employees affected by a proposed change in terms.

Of importance, the draft Code now stipulates that employers should contact ACAS for advice in advance of raising the prospect of dismissal and re-engagement. This differs from the previous version, which signposted employers to ACAS if they were unable to reach agreement with their employees.

In addition, further revisions have been made to the draft Code:

• It is best practice that information shared with the employee relating to the proposals should be in writing. This differs from the previous version of the draft Code, which did not make reference to information being provided by employers in writing
• Prior to making a decision to dismiss staff, the Code has been amended so that employers no longer have to conduct a full re-assessment of their plans at this stage. Instead, it is noted that employers should re-examine their proposals
• Phasing in the proposed changes is now a best practice recommendation rather than an obligation, which reflects that it will not be appropriate in all circumstances.

The government anticipates the Code will improve industrial relations by ensuring that employers consider alternatives to dismissal and re-engagement. Alongside this it suggests striking a balance between protecting employees and retaining flexibility for businesses to make changes to its terms and conditions.

Impact on schools and next steps

The updated Code is awaiting parliamentary approval. It is of particular relevance to schools planning to undertake consultations with staff over proposed changes in terms and conditions, where dismissal and re-engagement is a possible outcome of last resort – for example consultations over proposed changes to pension arrangements for teaching staff.

Schools should familiarise themselves with the provisions of the Code. If, following the Code taking effect, a school were to unreasonably fail to comply with it, employment tribunals will be able to apply up to a 25% uplift of an employee’s compensation in the event of a successful claim.

That said, whilst schools should comply with the Code, it does not represent a fundamental change in the law. The practice of dismissing and re-engaging staff where, following genuine and meaningful consultation, agreement to proposed changes to terms and conditions of employment cannot be reached is not prohibited by the Code.

The Code essentially reflects existing law and best practice approach to managing consultations regarding proposed changes in contract terms, and the possible outcome of dismissal and re-engagement.

We will of course keep schools updated on any further developments.