Government cracks down on ‘fire and rehire’ practices

The government is taking strong action against employers that use the controversial practice of ‘fire and rehire’.

by | 24 Jan, 2023

Last year, P&O Ferries deliberately sought to evade the law by sacking 786 seafarers without due consultation. Having made no efforts to inform the business secretary at the time, they failed to follow best practice or do the right thing for their employees. As a result, Grant Shapps, as transport secretary at the time, introduced a nine-point plan including primary legislation to tackle these issues.

Through a planned statutory code of practice, the government is protecting employees and cracking down on employers that use controversial dismissal tactics. The code, subject to a consultation first, will make it explicitly clear to employers that they must not use threats of dismissal to pressurise employees into accepting new terms and that they should have honest and open-minded discussions with their employees and representatives.

‘Fire and rehire’ refers to when an employer fires an employee and offers them a new contract on new, often less-favourable terms. The government has been clear on its opposition to this practice being used as a negotiating tactic and is now making it clear how it expects employers to behave.

This new statutory code of practice will set out employers’ responsibilities when seeking to change contractual terms and conditions of employment, including that businesses must consult with employees in a fair and transparent way when proposing changes to their employment terms.

Once in force, courts and employment Tribunals will be able to take the code into account when considering relevant cases, including unfair dismissal. They will have the power to apply a 25 per cent uplift to an employee’s compensation in certain circumstances if an employer is found to not comply with the statutory code.

Business Secretary Grant Shapps said the new code will crack down on firms mistreating employees and set out how they should behave when changing an employee’s contract.

The government asked the Advisory, Conciliation and Arbitration Service to produce guidance for employers, which was published in 2021. This new Code of Practice showed the government is going a step further to protect workers across the country while balancing that with the flexibility that businesses require.

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