Government launches final fire and re-hire Code

The Government has published a final draft of a new code of practice on dismissal and re-engagement. This follows last year’s consultation on the initial draft, to which the Government has now responded. According to the accompanying press release, the Code has already been laid before Parliament and, subject to its approval, will be brought into effect “later in the summer”.

The purpose of the Code is explained in the introduction as follows:

The purpose of this Code is to ensure that an employer takes all reasonable steps to explore alternatives to dismissal and engages in meaningful consultation with a view to reaching an agreed outcome with employees and/or their representatives. The Code also seeks to ensure that the employer does not raise the prospect of dismissal unreasonably early, or put undue pressure on employees by threatening dismissal where this is not, in fact, envisaged.

It won’t apply where the only reason for dismissal is redundancy, but otherwise applies regardless of the number of employees potentially affected, or the reasons the employer has to seek changes to terms and conditions.

The Code will not create any free-standing rights, but like the ACAS Code of Practice on Disciplinary and Grievance Procedures, any relevant provisions must be taken into account by employment tribunals in specified proceedings. These include unfair dismissal but not, at least currently, claims for protective awards for breach of collective consultation requirements. If an employer fails to comply with the Code, the tribunal has a discretion to increase the compensation that would otherwise be payable by up to 25%. The tribunal can also make a corresponding deduction if the employee is at fault (though it is hard to see how such a possibility would arise in this context).

The Code is therefore an aid to the interpretation of employers’ existing legal obligations, rather than an attempt to summarise what those obligations entail in a dismissal and re-engagement situation. That said, if the employer has an obligation to consult with union or employee representatives over its proposals, much of the Code overlaps with existing legislation on collective redundancies. But where fewer than 20 employers are potentially affected, the Code will have a bigger part to play in spelling out what is expected of an employer in practice.

Amendments to the Code made since the draft was published last year reflect the Government’s aim (set out in the forward of its response to the consultation) “to strike the right balance between supporting employers to grow their businesses through a flexible labour market and protecting workers from unfair practices that undermine employment protections”.

Examples of employer-friendly changes made to the initial draft include:

• removing the requirement for employers to review their business strategy as well as their plans when considering the outcome of consultation
• amending the Code so that that phasing in changes is now a best practice recommendation rather than an obligation
• the Code no longer states that it is important that employers and employee representatives to continue to seek agreement on the new imposed terms after dismissal and re-engagement has taken place.

These changes are relatively minor in the context of the Code as a whole. The changes that have made to make the Code clearer and a little more concise are probably more significant. Most importantly, the guidance is now presented in a more logical order and some duplication has been avoided. Now that the Code has been finalised, it would be a good time for employers to review its contents, in anticipation of the Code being brought into effect over the summer.