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Business Update

Volume 711: debated on Tuesday 29 March 2022

The Government have condemned the use of threats of dismissal and re-engagement on reduced terms, so-called “fire and rehire”, as a negotiation tactic when employers are seeking to renegotiate contracts.

Last year I asked the Advisory. Conciliation and Arbitration Service (ACAS) to look at this issue, and welcomed the publication of their online guidance. In the guidance, ACAS states that an employer should only consider dismissing and offering to rehire someone on new terms as a last resort. Before doing so, an employer must have made all reasonable attempts to reach agreement through a full and thorough consultation. The guidance is available at: Considering employment contract changes: Making changes to employment contracts – employer responsibilities - Acas

The Government will go further. The Department for Business, Energy and Industrial Strategy will bring forward a statutory code of practice on dismissal and re-engagement, under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. We will bring this forward as soon as parliamentary time allows.

This statutory code of practice will be admissible in evidence before a court or employment tribunal in England, Scotland and Wales. Where relevant, statutory codes are referred to by employment tribunal judges when deciding the level of award an employee is entitled to. Subject to satisfying the statutory requirements the tribunal can award an uplift in compensation to the employee subject to a maximum of 25% of the overall award. This increases the size of the sanction for companies who abuse the process and do not treat their employees fairly, and should provide a further deterrent effect.

The Government will set out next steps after recess, and will be consulting on the draft code later this year as required by law.