Dismissal
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New statutory code on dismissal and re-engagement

On 18th July 2024, a new statutory code came into force in England, Scotland, and Wales, aimed at providing clearer guidance on the practice of dismissal and re-engagement of employees. This new Code of Practice on Dismissal and Re-engagement, also known as the “fire and rehire” code, has significant implications for employers. Understanding its provisions and the practical steps to comply with it is crucial for maintaining fair and lawful employment practices.

Background and Purpose

The new code was introduced in response to increasing concerns about the use of dismissal and re-engagement tactics by some employers to change employees’ terms and conditions. Such practices, often referred to as “fire and rehire,” have raised ethical and legal questions, particularly when used as a means to enforce less favourable terms on employees without proper consultation.

The statutory code aims to:

  1. Promote fair and constructive dialogue between employers and employees during negotiations about changing terms and conditions.
  2. Provide a clear framework to help reduce disputes and potential litigation arising from dismissal and re-engagement practices.
  3. Increase transparency and fairness in how employers handle changes to employment terms.
Key provisions of the statutory code

The statutory code outlines several key principles and steps that employers must follow:

  1. Genuine business reasons – employers must demonstrate genuine and compelling business reasons for any proposed changes to terms and conditions. These reasons should be clearly communicated to employees.
  2. Meaningful consultation – employers are required to engage in meaningful consultation with employees or their representatives. This involves:
    • Providing adequate information about the proposed changes.
    • Allowing sufficient time for discussions and consideration of alternative solutions.
    • Seeking to reach an agreement through negotiation and compromise.
  3. Fair process – the code emphasises the need for a fair process, including:
    • Considering the impact of changes on employees.
    • Exploring all possible alternatives to dismissal.
    • Ensuring that dismissal is genuinely a last resort.
  4. Written confirmation – any agreed changes must be confirmed in writing, outlining the new terms and conditions and ensuring that employees fully understand the implications.
  5. Legal compliance – employers must ensure that any actions taken comply with existing employment laws, including those related to unfair dismissal and redundancy.
Practical steps for employers

To comply with the new statutory code, employers should:

  1. Review current practices – assess current policies and practices related to changing employment terms. Ensure they align with the new statutory code.
  2. Training and awareness – provide training for HR professionals and managers on the requirements of the new code and effective consultation techniques.
  3. Document processes – maintain clear and detailed records of all consultation processes, discussions, and decisions made regarding changes to employment terms.
  4. Seek legal/HR advice – when in doubt, seek legal advice to ensure that all actions comply with the new code and existing employment laws.
  5. Communicate transparently – keep open lines of communication with employees throughout the process, ensuring transparency and fostering trust.
Situations where this process would not apply

It is important to note that the new statutory code on dismissal and re-engagement does not apply to redundancy situations. Redundancy, which occurs when an employer needs to reduce their workforce because a job is no longer needed, is governed by a different set of legal requirements and procedures. Redundancy involves its own specific processes, such as the need for redundancy payments and adherence to fair selection criteria, which are distinct from the dismissal and re-engagement procedures outlined in the new code.

The introduction of the new statutory code on dismissal and re-engagement marks a significant step towards ensuring fairer treatment of employees during negotiations over changes to terms and conditions. By adhering to the principles outlined in the code, employers can not only avoid potential legal pitfalls but also encourage a more positive and cooperative workplace.

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