Back in March, the UK Government announced that a new Statutory Code of Practice would be implemented on the topic of "fire and rehire" when employers are making changes to terms and conditions of employment.
Fire and rehire is typically where employers terminate employment and offer the employee new terms (usually lesser terms) to re-engage on. It is used by employers to get employees to sign up to changes to their terms and conditions of employment. It is not unlawful for employers to use this method however it has been subject to review and criticism over the past few years. It can reduce morale within the workforce and damage the trust between employer and employee.
No clear timescales were provided back in March and recently Paul Skully MP, Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (BEIS), has confirmed that the code will be introduced "when parliamentary time allows".
ACAS do currently have non-statutory guidance published on this topic which makes it clear that employers should fully consult their workforces and try their hardest to avoid fire and rehire. The new code is expected to include penalties and detail the proper process for employers to follow if going down this route.
With the new code pending, employers should tread carefully if looking to go down the fire and rehire route. We recommend that it is a last resort and the first step should normally always be to seek agreement with employees as to the changes.
With the recent P&O mass redundancies, it does raise the question as to whether a code with penalties will deter employers from using the fire and rehire method altogether. It might be that employers decide that the cost of not following the code do not outweigh the management time and efforts needed to follow it - similar to the cost analysis that potentially was applied by P&O. This is one to watch and we will keep you updated as and when we know more about the code.
Legislation to lay the Code will be introduced when parliamentary time allows and will be subject to the affirmative resolution procedure.