On 20 January 2025, the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 (SI 2024/1272) (the “Order”) came into force.

An employee can bring a claim under section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”) for a protective award if there has been an alleged failure to inform and consult appropriate employee representatives when the employer proposes to make 20 or more redundancies.  The Order provides that a Tribunal can now increase a protective award, where a claim has been upheld relating to a “fire and re-hire” situation, if an employer has unreasonably failed to comply with the statutory Code of Practice on Dismissal and Re-engagement (the “Code”). 

A protective award can be up to 90 days gross per affected employee.  This can now be increased by up to 25%.  This could be a significant financial burden for employers and it will therefore be more important than ever to follow the best practice guidance set out in the Code when considering any form of contractual change process that may involve proposed dismissal and re-engagement. 

What is the statutory Code of Practice on Dismissal and Re-engagement?

The Code itself came into force on 18^th July 2024 as part of the then Government’s efforts to address the practice of fire and re-hiring, following scandals such as the P&O Ferry saga in 2022.  The Code does not ban this practice but instead provides guidance with a view to limiting its use.  It applies where an employer is contemplating making changes to contracts of employment and, where agreement cannot be reached between the parties, envisages that it might opt for dismissal and re-engagement of the employee. The Code does not apply where an employer envisages it might make redundancy dismissals.

The Code sets out that if an employer is considering dismissal and re-engagement of an employee (if agreement cannot be reached about a change in the employee’s contract), it should first contact ACAS before raising the prospect of dismissal and re-engagement with the employee. The employer should take all reasonable steps to explore alternatives to dismissal and engage in meaningful consultation with a view to reaching an agreed outcome with the employee (and/or their representatives).  The Code also seeks to ensure that the employer does not raise the prospect of dismissal unreasonably early or put undue pressure on employees by threatening dismissal where this is not, in fact, envisaged.

A failure to follow the Code does not (of itself) make an employer liable for an unfair dismissal claim or for a claim relating to a breach of the collective consultation obligations.  It is relevant evidence however and will now be considered by Tribunals assessing whether any uplift should be applied. 

Cases will always be considered on their own merits, and employers proposing to make any contractual changes should consider the Code and seek appropriate legal advice. 

Please contact Jessica Jones on jones@ortolan.com for more information.

Further information

For further information, please see the Gov.uk website for the Code’s statutory guidance: https://www.gov.uk/government/publications/dismissal-and-re-engagement-code-of-practice/code-of-practice-on-dismissal-and-re-engagement-issued-by-the-secretary-of-state-under-section-203-of-the-trade-union-and-labour-relations-consolidat#dismissal-and-re-engagement