Jane Sinnamon is a Partner at specialist employment law firm, Collingwood Legal. Jane considers the draft Code of Practice on Dismissal and Re - Engagement and what this could mean for employers.
The lack of workforce consultation prior to the sudden sacking of nearly 800 P&O Ferries workers in 2022 led to calls for greater regulation of the practice of dismissal and re – engagement. In March 2022, the Government committed to introducing a Statutory Code of Practice with a view to setting standards for all employers in a “fire and rehire” situation. The Draft Code of Practice on Dismissal and Re – engagement (“the Code”) was published on 24 January 2023.
What situations would the Code apply to?
Based on the wording in the Code, the Government does not envisage this Code applying in “genuine redundancy” situations, but it would apply in situations where new terms are proposed to employees and the employer envisages dismissing the employees and offering them re – engagement or dismissing the employees and hiring new employees to perform their duties under the new terms. As changing terms and conditions and redundancies are often intertwined measures, such a distinction may be difficult to realise in practice.
Importantly, the Code applies regardless of the number of employees who may be affected.
What does the Code say?
The content of the Code should not be a surprise for employers as it builds on the Acas advice that was previously published in 2021.
Unsurprisingly, “fire and rehire” is presented as an option of last resort which should only be used once an employer has exhausted alternative solutions. The Code identifies the need for employers to be aware of who they will need to consult with, whilst highlighting that employers need to be wary of any collective consultation obligations outside of the Code and to avoid bypassing collective bargaining where there is a recognised trade union.
If alternatives to contractual changes cannot be achieved, the Code advocates that the employer should engage in consultation with their workforce, less as a matter of merely following procedure, but in good faith in an effort to achieve a solution. It is stressed that an employer needs to be honest if it is prepared to unilaterally force through any contractual changes, but that this should not be used as a negotiating tactic to achieve agreement where an employer does not contemplate making dismissals. The Code also guides employers on the process should changes be agreed and, alternatively, if changes cannot be agreed.
What does this mean for employers?
The Code does not create any new legal obligations for employers, nor does it change the position that the practice of “fire and rehire” risks giving rise to various legal claims (including unfair dismissal). What has changed is that unreasonable failure to follow the Code could lead to a 25% increase in any award made by an Employment Tribunal if an employee is successful in their legal claim. The potential liability for an employer is therefore set to increase because of the Code.
It is very easy to think that a ‘P&O – esque’ situation would not befall the majority of employers, but Acas research from 2021 indicated that the practice has become more prevalent in recent years, especially during the COVID – 19 Pandemic. As we enter uncertain economic waters, employers may find themselves facing a situation where contractual changes, even at the cost of dismissals, become a reality.
The Code is still in draft form and employers have until 18 April 2023 to submit responses using the address: www.gov.uk/government/ consultations/draft-code-of-practice-ondismissal-and-re-engagement
Collingwood Legal is a specialist employment law firm and we provide bespoke training and advice to organisations on all areas of employment law.