The Department for Business, Energy and Industrial Strategy has published its draft consultation paper on the proposed new Code of Practice on Dismissal and Re-engagement.
The government proposes that the Code will apply where an employer:
- considers that it wants to make changes to its employees’ contracts of employment; and
- envisages that, if the employees do not agree to those changes, it might dismiss them and either offer them re-employment on those new terms or engage new employees or workers to perform their roles on the new terms.
The Code is designed to set out good practice when employers need to negotiate or impose changes to terms and conditions of employment. Failure to comply with the Code will be taken into account in any unfair dismissal claim (if the employer ultimately dismisses those who do not agree to contractual changes). An unreasonable failure to comply can result in an uplift to any compensation awarded of up to 25% (in a similar way to a failure to comply with the Acas Code of Practice on Disciplinary and Grievance procedures).
The proposed Code will apply regardless of the numbers of employees affected and regardless of the business objectives pursued by the employer, or the nature of its reasons for seeking changes to terms or conditions.
The Code is detailed. In addition to requirements for full, meaningful consultation with the workforce and/or unions, the Code recommends that if agreement cannot be reached over changes to terms and conditions, the employer should actively re-examine its business strategy considering the potentially serious consequences for employees. It also includes recommendations for sharing information (which currently only applies to collective consultation). It further recommends that if multiple changes to terms and conditions are sought, they should be implemented (where possible) over a period of time, and that the need for that change be kept under review so that original terms might be re-introduced if the original reason for changing the terms ceases to be relevant.
In summary, the Code is likely to help employees resist, or at least slow down, the process by which employers can impose new terms by threatening to dismiss and re-engage. At this stage, the Code is only in draft form and subject to consultation (which closes on 18 April 2023). The government has not set a timeframe for bringing the Code into force; however, the government has for some time promised to cut down on “fire and re-hire” practices and the Code provides a good indication of the type of restrictions that are likely to be imposed when seeking to change employment terms and conditions.