UK government consults on draft Code of Practice on Dismissal and Re-engagement

The UK government launched a consultation on 24 January on the draft statutory Code of Practice on Dismissal and Re-engagement, also known as ‘firing and rehiring’. The draft Code of Practice outlines employers’ responsibilities when seeking to change the terms and conditions of employment, in instances where there is the prospect of dismissal and re-engagement.

The practice of dismissal and re-engagement has attracted significant media attention in the last few years, including the scandal involving P&O Ferries in March 2022 when 800 members of staff were dismissed without due consultation and during the Covid-19 pandemic when use of the practice by employers appeared to increase.

The government’s action aims to ensure that employees are protected and consulted as much as possible during such processes, and that dismissal and re-engagement are only ever considered by employers as a last resort. An employer will be required to take all reasonable steps to explore alternatives to dismissal and carry out fair and transparent consultations in good faith with employees, employee representatives and trade unions. Employers’ consultations with staff during the dismissal and re-engagement process should occur without the threat of dismissal being used to pressure employees into agreeing to new terms and conditions.

In 2020, the government directed the Advisory, Conciliation and Arbitration Service (Acas) to gather evidence on the practice of ‘firing and rehiring’ in order to better understand how the practice was being used and who was being impacted. Stakeholders engaged by Acas expressed concern that threats of dismissal were increasingly being used by employers to pressure employees during the early stages of negotiation.

In November 2021, Acas published guidance entitled ‘Making changes to employment contracts – employer responsibilities,’ to help employers understand their responsibilities when considering making changes to employment contracts.

The government's new Code of Practice will not apply where an employee is dismissed because there is a genuine redundancy, as defined in the Employment Rights Act 1996.

The government is due to publish a response to the consultation and a final version of the Code of Practice in due course. The consultation is open for feedback until 18 April 2023.