Fire and Rehire
The new statutory Code of Practice on Dismissal and Re-engagement came into force on 18 July 2024. It provides practical guidance where you’re considering making changes to your employees’ employment contracts and you think that, if they don’t agree, you might opt for dismissing them and then reemploying them on new terms of employment. This is commonly known as “fire and rehire”.
The code sets out that you must ensure that you:
- take all reasonable steps to explore alternatives to dismissal, and
- engage in meaningful consultation with a view to reaching an agreed outcome with employees.
So, if dismissal and re-hiring is one option, the Code should be followed. If dismissal was never going to be an option, as you are willing to change your plans, then the Code wont apply.
A formal order came into force on 20 January 2025 confirming one of the consequences of a failure to follow the Code when going through a termination and re-engagement exercise. That is, if a Tribunal award is made for a failure to collectively consult about the terminations, the Tribunal can increase the award by up to 25%. This will be the case if an employer has unreasonably failed to follow the Code. Alternatively, it can reduce an award by up to 25% for the same reasons.
The Code of Practice on Dismissal and Re-engagement
The Code of Practice on Dismissal and Re-engagement says you should:
- provide information in writing, as soon as you can, to support meaningful consultation
- share as much information about your proposals as you can. This could include:
- information about what the proposed change is
- who will be affected
- business reasons for it
- proposed timings for introduction (and the reasons for those timings)
- other options that you’ve considered
- your proposed next steps
- fully explain your reasons if you can’t provide some information, e.g. because it’s commercially sensitive
- consult openly for as long as you can in good faith, genuinely considering any reasonable alternative proposals, with a view to reaching an agreed outcome with the employee
Prepare your Paperwork
If you need a letter to ask for agreement to vary terms of employee contracts, let us know. Such a letter will include information recommended in the Code, as well as information on the proposed contract variations.
