The CIPD has recently responded to the UK Government’s consultation on a new Code of Practice on dismissal and re-engagement – more commonly known as ‘fire and rehire’. Job security, and the financial stability this should afford, couldn’t be more important to people in the current climate of economic uncertainty and cost-of-living crisis. We, therefore, welcome the new draft Code, which has the potential to improve protection for workers and highlight the serious risks of firing and rehiring.
A new statutory Code also provides the opportunity for the government, in collaboration with other stakeholders, such as professional bodies like the CIPD, as well as trade unions and other employment bodies, to raise awareness of these minimum standards of fairness and the importance of compliance.
How widespread is ‘fire and rehire’?
The high-profile cases of ‘fire and rehire’ we have seen in recent years are a stark example of how non-compliance by unscrupulous employers can undermine the employment rights of some of the most vulnerable workers in the UK labour market.
Fortunately, they are not typical of most UK employers. A survey of 2,000 by the CIPD found that one in five employers (22%) made changes to employees’ terms and conditions of employment between March 2020 and July 2021. It found that, while 19% changed terms and conditions through consultation, negotiation and voluntary agreement, just 3% – the equivalent of 42,960 employers in the UK business population – did so through dismissing staff and rehiring them on new terms.
However, the CIPD’s concern about some ‘fire and rehire’ practices prompted it to develop and promote its own guidance for employers.
Key points on the consultation
We will update the CIPD’s guidance when the new Code is published. The new Code of Practice contains sound advice for employers, and we gave feedback on key specific questions raised in the consultation, such as:
The Code requires employers to share as much information as possible with employees, suggests appropriate information to consider, and requires employers to answer any questions or explain the reasons for not doing so: Do you agree this is a necessary step? We firmly agree this is a necessary step, and with the Code’s advice that, the more that the employees and their representatives are able to understand about the background to the proposals, the more likely it is that the parties will be able to come to agreement, or else suggest alternative solutions. We also welcome the areas and principles covered in the provision of information, such as providing it as early into the process as possible, clarity on to whom it should be provided, as well as the employer’s obligations and the type of information.
Before making a decision to dismiss staff, the Code requires the employer to reassess its analysis and carefully consider suggested factors. Do you agree with the list of factors employers should take into consideration before making a decision to dismiss? We welcome the Code’s wording that underlines the importance of caution and careful reflection by an employer who is at the point of considering dismissal and re-engagement. We also welcome the emphasis that an employer may decide to dismiss and offer to re-engage ‘as a last resort’ – we suggested this could be reinforced further by stating ‘as an absolute last resort’. We also suggested it may be helpful to add a further statement:
If the shorter-term business aims associated with implementing dismissal and re-engagement have been balanced against the potential high risk of legal claims and longer-term impact on employment relations and employee engagement.
Do you think the Code will promote improvements in industrial relations when managing conflict and resolving disputes over changing contractual terms? We hope that the Code will raise awareness about the potential legal and employment relations risks of employers pursuing a process of dismissal and re-engagement unless as an absolute last resort. The Code and the employment law it seeks to uphold will carry more weight if supported by a wider enforcement framework in the UK. The CIPD policy paper Revamping labour market enforcement in the UK (October 2020) examines the reforms needed to improve a current system that’s not fit-for-purpose. Although reform lies outside the scope of this Code, and it does mention employers’ legal obligations, we would still like to draw attention to the importance of swift and effective enforcement of the law relating to dismissal and re-engagement where there is non-compliance.
Will the Code have impact and deter ‘fire and rehire’ practices?
The publication of the new Code is a very good opportunity to draw attention to employers’ legal obligations but also their wider remit as responsible employers, by following this course of action as an absolute last resort. Therefore, we hope the government will launch a high-profile communications campaign to promote the new Code when published, in collaboration with employment and professional bodies such as the CIPD. We welcome the opportunity to support the launch and any promotional activity, and will of course promote awareness of it across our channels to reach our community of HR professionals. We will reinforce that by linking to the Code in our own guidance and wider content.
The CIPD’s view is that ‘fire and rehire’ practices should only ever be considered as an absolute last resort if changes to employment contracts are critical and voluntary agreement is not possible.
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