“Fire and rehire” tactics refer to the practice of facilitating a change of employment terms by dismissing employees and then immediately re-engaging them on new terms. Increased public concern over these tactics during the Covid-19 pandemic led to demands for the government to change the law to give employees greater protection.
Although the government regards these tactics as unacceptable, it resisted demands for legislative change. Instead, in December 2021, ACAS published best practice guidance to help employers explore all other options before considering fire and rehire to change employee contracts, and to emphasise the importance of informing and consulting employees and their representatives. An employer’s failure to follow the guidance might increase an employee’s chances of winning an unfair dismissal claim – but beyond that, the guidance has no real teeth.
The new Statutory Code will set out how businesses can hold “fair, transparent, and meaningful” consultation when changing employment terms. It will also include practical steps that employers should follow.
Key Action Points for Human Resources and In-house Counsel
The introduction of a Statutory Code will not change the current law as such, but it will have more bite than the current guidance. With the Code, there will be a mechanism for tribunals to increase the compensation payable to employees where employers unreasonably fail to observe their statutory obligations to dismiss fairly and to consult and inform employee representatives. The Code will be introduced “when parliamentary time allows”.
For further information, see our more detailed update: