447: Statutory Code of Practice on Dismissal and Re-engagement to come into effect on 18 July 2024

On 28 May 2024, Parliament approved the Code of Practice (Dismissal and Re-engagement) Order 2024. This means that, despite the general election, the statutory Code of Practice on Dismissal and Re-engagement will come into force on 18 July 2024 in England, Wales and Scotland. The final draft of this Code was published on 19 February 2024 alongside the Government’s response to last year’s consultation.

The Code will apply in situations where an employer is considering making changes to employees’ contracts of employment and envisages that if those changes are not agreed, employees may be dismissed and re-engaged on less favourable terms (often known as ‘fire and re-hire’). Failing to follow the Code does not in itself give rise to a claim, but Tribunals will take the Code into account where relevant and will have the power to increase an employee’s award by up to 25%.

The Code stresses the importance of treating fire and re-hire as a last resort. Employers should initiate early and meaningful consultations with employees or their representatives; provide information as early as reasonably possible; and contact Acas for advice before raising the prospect of fire and re-hire. Even where the proposed changes are unlikely to be agreed, employers should consult in good faith for as long as reasonably possible. The threat of dismissal should not be used as a negotiating tactic, or where it is not actually envisaged. When it is clear that some or all of the changes will not be agreed, but still need to be implemented, employers should re-examine their proposals. As much notice as possible should be given of any dismissals, and employees should be re-engaged as soon as reasonably practicable. The Code of Practice will apply irrespective of whether collective bargaining applies to the workforce and regardless of the number of employees affected.

The Code will not apply where the prospect of dismissal and re-engagement has been raised with employees or their representatives before 18 July 2024. It should also be noted that if Labour wins the general election, the practice of fire and re-hire may be banned altogether except in extreme situations such as insolvency. A Labour Government is therefore likely to implement new legislation to deter fire and re-hire (and also potentially ‘fire and replace’) and to strengthen or repeal the current Code.