Following numerous fire and rehire scandals by household name companies, the government is currently in consultation about releasing a draft statutory Code of Practice. The consultation is set to end at 11:45pm on 18th April 2023, and will set out employers’ responsibilities when seeking to change employment conditions, hopefully making it more difficult to fire and rehire staff.
Grant Shapps MP, the Secretary of State for Business, Energy and Industrial Strategy, explained that:
‘The government has been clear that threats of dismissal and re-engagement should not be used as a negotiation tactic. Dismissal and re-engagement should only be considered as an absolute last resort. We expect all employers to engage meaningfully with their workforces and representatives, whilst considering all available options.’
What is fire and rehire?
Fire and rehire is a method where employers sack their staff, before telling them that they can apply for their old jobs on less favourable terms. This has been recognised in the practices of businesses such as British Gas, Tesco, and Weetabix. Most recently, P&O Ferries was consumed by scandal, as they brought fire and rehire to the forefront of public decision once again.
What was the P&O Ferries fire and rehire scandal?
In March 2022, P&O Ferries fired 800 seafaring staff via video call. Employees were told that it was their last day of work, and that they were being let go on grounds of redundancy. The company claimed that the decision was due to losses during the pandemic and they were going to start using agency workers instead of their current workforce. Following this, they encouraged staff to apply to the agency they planned to use in a less explicit case of ‘fire and rehire’. The sudden redundancies caused uproar amongst the employees’ various unions, as demonstrations were staged at P&O ports in the following days.
What will the Code of Practice include?
The Code provides practical guidance to employers and employees in situations where the employer is considering making changes to a contract of employment, and envisages dismissing the employee or hiring someone else, should they disagree with the changes. This involves consulting staff to explore alternative options without using the threat of dismissal to pressure employees to agree to new terms.
It ensures that an employer takes all reasonable steps to explore alternatives to dismissal, encouraging meaningful consultation with trade unions, employee representatives, or the individual.
The new Code of Practice will provide basic practical guidance on how employers can avoid, manage and resolve such conflict and disputes in the future. It will also apply regardless of how many employees are affected by the proposals.
What does this mean for employers?
Although the Code does not impose legal obligations, it is admissible as evidence in proceedings before a court or employment tribunal and will be taken into account. With this in mind, employers should definitely consider how they can reflect the draft Code of Practice in their own company Code. Not only will this help to avoid becoming entangled in conflicts, but will hopefully also lead to an open and honest workplace environment, where contractual changes can be discussed rationally.
One of the main issues with the actions of P&O Ferries is that they did not adhere to the requirements for consultation before making employees redundant. The requirements are different, depending on how many employees the redundancy involves, which are as follows:
- If it is less than 20 employees, then simply an individual consultation with each person is needed, and there is no time scale for this;
- If 20 or more employees are being made redundant, then consultations must be help with trade unions or elected representatives within minimum time scales;n
- When 20-99 employees are being made redundancy, then the minimum time scale is 30 days before the notification of dismissalFor 100 or more employee redundancies, the minimum time scale is 45 days before the notification of dismissal.
Hopefully the draft statutory Code of Practice will help to facilitate workplace discussions between employers and employees around changing contracts.
If you would like further advice about this topic, please do not hesitate to get in touch with Eleanor Taylor at: [email protected]
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