New statutory code to prevent unscrupulous employers using fire and rehire tactics

A statutory code on the practice of “fire and rehire” will clamp down on controversial tactics used by employers that fail to engage in meaningful consultations with employees.

On Tuesday (29 March) Labour Markets Minister Paul Scully announced a new statutory code on the practice of “fire and rehire”. The code will also clamp down on controversial tactics used by unscrupulous employers that fail to engage in meaningful consultations with employees.

The practice of “fire and rehire” refers to when an employer dismisses a worker and rehires them on new, less favourable terms. The government has always been clear that using fire and rehire as a negotiating tactic is completely unacceptable, and we expect companies to treat their employees fairly.

The code will include practical steps that employers should follow. A court or Employment Tribunal will take the code into account when considering relevant cases, including unfair dismissal. The courts will have the power to apply an uplift of up to 25 per cent of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.

Fire and rehire tactics are often used when employers want to change the terms and conditions of their workers. This can take place when a company is in financial distress and needs to cut costs to stay in business.

In November 2021, Acas – the Advisory, Conciliation and Arbitration Service – published guidance for employers considering making changes to employment contracts, making clear that fire and rehire should be an option of last resort and that employers should first have made all reasonable attempts to reach agreement through full consultation.

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