The Practice on Dismissal and Re-engagement (also known as 'fire and rehire') has been a recent topic for discussion within employment law. This is largely due to a new statutory Code of Practice being introduced - it aims 'to ensure employers take all reasonable steps to explore alternatives to dismissal' and re-engagement.
What is the process of 'Firing and rehiring'?
'Fire and rehire' is essentially a way that an employer can attempt to change an employee's terms and conditions where their consent has been not successfully obtained. For example, employers may wish to amend an employee's shift patterns. Where an employer and employee cannot reach a mutual agreement to alter such terms and conditions, an employer may move to 'fire and rehire' them instead. An employer wishing to apply this practice will consequently dismiss the employee and hire them back immediately, likely under the previously rejected terms and conditions. This puts the employees in a position where they must choose between unsatisfactory terms and conditions or losing their job entirely.
The new Code of Practice on Dismissal and Re-engagement establishes what responsibilities employers have towards their employees when they look to alter their employees' terms and conditions. The new Code of Practice has been in force since 18th July 2024 in Scotland, England and Wales and it provides guidance to reduce conflicts, outline employers' responsibilities and improve industrial relations. Essentially, the Code advises what route the employer should take in order to avoid tension (particularly when an employee's dismissal is not genuinely being considered by the employer).
The new Code of Practice re-emphasises that employers' use of dismissal and re-engagement should be limited and should only be used as a 'last resort'. Employers are expected to investigate other options through meaningful consultation and explore alternatives to dismissal. There is no minimum timescale for a consultation, but it should continue for 'as long as reasonably possible'. Furthermore, the Code advises that 'fire and rehire' should not be used as a device to coerce employees into undesirable contracts by hanging the threat of dismissal over their heads (particularly when dismissal is not genuinely being considered). If an employer becomes aware that the proposed changes to an employee's contract are not likely to be agreed, the Code encourages employers to re-consider their proposals and obtain employee feedback.
Non-compliance with the Code does not automatically result in a stand-alone employment claim, however, if it can be established that an employer unreasonably fails to follow the guidance (for example, in unfair dismissal cases) then it is at the Tribunal's discretion to uplift any awarded compensation by up to 25%.
It is important to note that an employer who, having exhausted all other possibilities, has correctly followed the process outlined above may be able to consider 'firing and rehiring'. Although the Code does not prohibit the fire and rehire process, it recognises the needs and considerations of both the employer and employee. Therefore, employees can be reassured that there are more fair and stringent requirements for employers to follow if they are going to engage in such a process. On the other hand, the Code's aim to improve relations in the workforce may reduce the likelihood of employers losing valuable employees and incurring subsequent recruitment costs.
For tailored solutions and expert assistance with employment-related matters, you can rely on our experienced Employment Law specialists at 0141 221 1919. We are here to provide the support and guidance you need to navigate the complexities of the new Code.
