Code of practice on dismissal and re-engagement (fire and rehire)

On 18 July 2024, the UK's first Statutory Code of Practice on dismissal and re-engagement came into effect for England, Wales and Scotland. 

The code provides employers with practical guidance to follow when proposing to make changes to employees’ contractual terms and conditions, particularly where agreement to those changes cannot be reached. The code does not apply where an employer plans to dismiss an employee on the grounds of redundancy.

While the code does not dismiss the use of dismissal and re-engagement (fire and rehire), it identifies it as a last resort. Employers are encouraged to ensure that they engage in meaningful consultation with employees and avoid raising the possibility of dismissal unreasonably early or using it as a threat.

The key points for employers

• Employers must ensure alternatives to dismissal have been explored and engage in meaningful and transparent consultation with staff to try to find an agreed way forward. 
• Employers should only use dismissal and re-engagement as a last resort if agreement cannot be reached.
• Employers must consult in partnership with the trade unions.
• Employers must let employees know if they intend to dismiss and offer re-engagement if agreement cannot be reached, but not to do so unreasonably early or used as a negotiating tactic. 
• ACAS should be contacted for advice before raising the prospect of dismissal and re-engagement.
• The code provides guidance on implementing dismissal and re-engagement should a thorough consultation process exhaust any other option.

The code applies regardless of how many employees are affected, and irrespective of the business rationale behind the proposed changes. An uplift in any compensation may be awarded by an employment tribunal of up to 25 per cent if employers are found to have unreasonably failed to comply with the code of practice. 

Further information

You can read the full details on the GOV.UK website.