Dismissal and re-engagement Code of Practice - now in force

Amid the controversy over the Employment Rights Bill, it's important that employers don't lose sight of legislative changes already happening. 

One such area is dismissal and re-engagement (or “fire and rehire”).   Although the Employment Rights Bill is set to make such dismissals automatically unfair in many cases, the Government is also moving ahead with the Statutory Code of Practice on dismissal and re-engagement, which is now in force.  This will enable Employment Tribunals to increase compensation for certain claims (including unfair dismissal and claims for failure to consult collectively) by up to 25% where the employer has unreasonably failed to follow the Code (or reduce it by up to 25% if the claimant employee has unreasonably failed to follow the Code). 

The Code requires employers to take quite a different approach to dismissal and re-engagement than they may previously have done.   It emphasises the importance of genuine consultation and treating dismissal and re-engagement as a last resort.   In particular, it sets out the following requirements:

• Even where the employer considers that the employees and/or their representatives are unlikely to agree to the proposed changes, the employer should consult for as long as reasonably possible in good faith, with a view to reaching an agreed outcome.
• Employers should share as much information regarding the proposals as reasonably possible.  Employers should consider providing information about:
  • what the proposed changes are
  • who will be affected
  • the business reasons
  • the anticipated timings and the reasons for those
  • any other options that have been considered
• The employer must not raise the prospect of dismissal and re-engagement unreasonably early or use it as a negotiating tactic where the employer is not, in fact, envisaging dismissal.
• The employer should contact ACAS before raising the prospect of dismissal and re-engagement with staff.
• The employer should treat this dismissal and re-engagement as a last resort.
• The employer should consider giving an extended notice period in order to give employees enough time to adapt to the changes (e.g. changing childcare arrangements). 

The requirement to contact ACAS will raise tactical questions for employers as to when to do this. In some cases, it may be sensible to do this at an early stage in the consultation process, although it will be important to ensure that the messaging to employees is consistent with the information given to ACAS.  Employers should be aware that, as this is a new requirement, ACAS officers and staff may not be very familiar with the process.   Employers should ensure that they keep their own records of any contact with ACAS in order to demonstrate compliance if needed.