Government to crack down on “fire and rehire” practices

  • Business Advice
Government to crack down on “fire and rehire” practices
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Peninsula Team, Peninsula Team

(Last updated )

A new statutory Code of Practice concerning certain controversial dismissal tactics will, the Department for Business and Trade (DBT) argues, protect workers’ rights whilst respecting business flexibility.

Dismissal and re-engagement, also known as “fire and rehire”, refers to when an employer sacks an employee and then offers them a new contract on new, often less favourable, terms.

Business Minister, Kevin Hollinrake, said: “Our new Code will crack down on employers mistreating employees and sets out how they should behave when changing an employee’s contract.”

It will, he went on, make clear how employers must behave in this area and help to preserve security and opportunity for those in work.

A consultation on a draft statutory Code that sets out employers’ responsibilities when seeking to change employment terms and conditions ran from 24 January to 18 April 2023.

The Government has now published its response to the 50 replies it received to that consultation, together with an updated draft statutory Code on dismissal and re-engagement.

This has been laid in Parliament for approval by both Houses and, subject to that approval, it will be brought into effect later in the summer.

Employment tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the Code.

Head of Public Policy at the Chartered Institute of Personnel and Development (CIPD), Ben Willmott, said: “The Code promotes good practice, making clear employers should always seek to agree any changes to terms and conditions with employees and that ‘fire and rehire’ should only be used as an absolute last resort. It highlights the importance of early and meaningful consultation with employees to maximise the chances of finding alternative solutions which can lead to agreement over proposed changes.”

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