New fire and re-hire statutory codes require businesses to hold “fair, transparent, and meaningful consultations” on proposed changes to employment terms

What is fire and re-hire?

Dismissal and rearrangement also known as fire and re-hire, is the practice whereby an employer dismisses employees and rehires them on new contractual terms that are usually less favourable. This practice is a tactic used by some employers when they want to change the terms of employment but cannot reach an agreement with the employee.

 The new statutory codes 

Although lawful in the UK, improper fire and rehire practices create a significant danger of expensive claims and wider commercial ramifications if not managed or applied properly. The UK Government declared in 2022, that new legislative code would be created to “detail how businesses must hold fair, transparent, and meaningful consultations on proposed changes to “employment terms” in response to questionable employer practices. If fire and rehire procedures are deemed to be appropriate, the code would detail the practical procedures that employers should take. The government published a draft of the new Statutory Code earlier this year and sets out employers’ responsibilities when seeking to change employment terms and conditions, if there is the prospect of dismissal and re-engagement. It requires employers to consult staff and explore alternative options, without using the threat of dismissal to pressure employees to agree new terms. As of August 2023, the draft code is still being reviewed following public feedback, and the final draft is due to be published soon.

In light of new changes, Employers must understand that having inappropriate strategies in terms of fire and rehire practices raises a significant danger of legal action, harm to their brand, and a negative impact on employee relations. It should only be done after thorough research and evaluation of all other options. If an employer is considering changing the terms and conditions of its employees, the Code is meant to apply. If the employees do not agree to the changes, the employer may fire them, rehire them on the new terms, or hire new workers on the new terms. The Code would be applicable regardless of the number of affected employees or the employer’s justifications for attempting to impose new terms and conditions, but it would not be applicable in cases of true redundancy (as defined in section 139(1) of the Employment Rights Act 1996).

Courts and Tribunals will also take the Code into account when issuing judgements on relevant tribunal proceedings, such as unfair dismissal claims.

It is believed that this rule will lead to significant changes in the way employers approach termination and re-employment; limiting reputational damage, retaining valuable employees, and avoiding strike action are perhaps bigger drivers of agreement with employees and unions than compliance.

If you are an employee and believe that you have been subjected to unfair fire and rehire practices, or an employer looking to update its policies on the practice, please do not hesitate to reach out to Rahman Lowe, where our team of dedicated individuals will work on providing you with an exceptional standard of legal assistance and advice . Get in touch at info@rllaw.co.uk or at +44 (0)20 3950 5234 .