A new and updated draft Code of Practice on dismissal and re-engagement was published by the government in February 2024, better known as ‘fire and rehire’. This is the practice of changing the terms and conditions of employment contracts through the firing and rehiring of employees, and the first code was published after the uproar caused by P&O Ferries in March 2022. Although that was not strictly speaking a fire and rehire exercise, the government brought in the code of conduct to assist employers when changing terms and conditions of employment. 

The first consultation followed the original draft Code that was published in January 2023 and ran until March. This new version follows this consultation and doesn’t alter any key provisions although it does have some amendments, as well as reducing the size. 

It is expected this will come into force in the summer of 2024 once approved by Parliament.

While a Statutory Code doesn’t impose new binding legal obligations, the Code does apply in all situations, regardless of how many employees are affected, and what the reasons are for changing terms and conditions, unless it is a genuine redundancy situation as defined by law, which is expressly excluded from scope. It does not remove any existing legal obligations such as collective redundancy obligations. Where employers are contemplating changes that they envisage if employees will not agree with then they may be dismissed and rehired on the new terms, the Code must be applied. It is admissible in legal proceedings as evidence and will be taken into account by the ET and any court - failure to comply means claims can be increased / decreased by up to 25%.

The Code largely reflects current best practise:

• Employers must contact ACAS at an early stage before the suggestion of fire and rehire has been put to the workforce (strengthened from the earlier position of contacting ACAS if unable to reach agreement)
• Fire and rehire should be used only as a last resort
• If dismissal is not actually envisaged it should not be used
• It is good practice to give information to employees in writing
• Phasing-in changes is now ‘good practice’ rather than an obligation
• If fire and rehire is considered alongside redundancy as an option, the Code applies until fire and rehire is no longer an option
• No minimum consultation period, just “for as long as reasonably possible”
• Employees must not be coerced into signing new terms by threats
• Alternative solutions need to have been explored, including meaningful discussions