The government is consulting on proposals to introduce a statutory code of practice to stop controversial dismissal tactics used by unscrupulous employers
Following P&O Ferries’ instant dismissal of nearly 800 crew members without consultation and replacement with lower paid agency workers, the government is taking action against employers that use the controversial practice of ‘fire and rehire’.
Having made no efforts to inform the business secretary at the time, they failed to follow best practice or do the right thing for their employees. As a result, Grant Shapps, as transport secretary at the time, introduced a nine-point plan including primary legislation to tackle these issues.
A new statutory code will crack down on employers that use controversial dismissal tactics.
The code, subject to consultation, will make it explicitly clear to employers that they must not use threats of dismissal to pressurise employees into accepting new terms, and that they should have honest and open-minded discussions with their employees and representatives.
‘Fire and rehire’ refers to when an employer fires an employee and offers them a new contract on new, often less-favourable terms. The government has been clear on its opposition to this practice being used as a negotiating tactic and is now making it clear how it expects employers to behave.
The mandatory code of practice will set out employers’ responsibilities when seeking to change contractual terms and conditions of employment, including that businesses must consult with employees in a fair and transparent way when proposing changes to their employment terms.
Once in force, Courts and Employment Tribunals will be able to take the code into account when considering relevant cases, including unfair dismissal. They will have the power to apply a 25% increase to an employee’s compensation in certain circumstances if an employer is found to not comply with the statutory code.
The government rejected calls for an outright ban on the practice of dismissal and re-engagement, stating that ‘this would not be right as there are some situations in which dismissal and re-engagement can play a valid role as businesses may need the flexibility to use this option to save as many jobs as possible. We believe that this Code strikes the right balance between labour market flexibility and worker protections’.
The Code would apply where an employer:
- considers that it wants to make changes to its employees’ contracts of employment; and
- envisages that, if the employees do not agree to those changes, it might dismiss them and either offer them re-employment on those new terms or engage new employees or workers to perform the same roles on the new terms.
Business secretary Grant Shapps said: ‘Using fire and rehire as a negotiation tactic is a quick-fire way to damage your reputation as a business. Our new code will crack down on firms mistreating employees and set out how they should behave when changing an employee’s contract.
‘We are determined to do all we can to protect and enhance workers’ rights across the country.’
The government asked the Advisory, Conciliation and Arbitration Service to produce guidance for employers, which was published in 2021. This new Code of Practice goes a step further to protect workers across the country, while balancing that with the flexibility that businesses require.
Legislation will be introduced under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992.
The consultation will close for comment on 18 April 2023.
For more information about the draft code of practice, visit BrAInbox today where you can find answers to questions like What does the draft code of practice on fire and re-hire say?
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