The Government has responded to the draft Code on dismissing and re-engaging employees as means of changing employee’s terms of employment (now often called “fire and re-hire”) by presenting an updated draft Code to Parliament for approval (a link to the updated code is in the comments below).
If the draft Code is brought into force relevant provisions of the Code will have to be taken into account by employment tribunals when deciding cases where the Code is engaged.
James Symons, Director and Head of Employment Law shares his thoughts.
My reading of the Code is that it may place employers in a difficult position, particularly when initiating a process seeking to change the terms and conditions of 20 or more employees.
Paragraph 31 of the Code says employers should not raise the possibility of dismissal and re-engagement, as an option if the changes cannot be agreed, “unreasonably early” or use the “threat” of dismissal and re-engagement as a negotiating tactic. However, employers must also be “clear” if at any point they intend to opt for dismissal and re-engagement if an agreed outcome cannot be reached. There seems an inherent tension within this paragraph which will provoke an argument that either the employer has been insufficiently candid about its intention to opt for dismissal and re-engagement or, alternatively, that the employer is unreasonably using the “threat” as a negotiating tactic and raising the prospect “unreasonably early”.
To add to the tension that arises from paragraph 31 of the Code are the issues that will arise where an employer is simultaneously seeking to comply with their obligations under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”).
TULRCA requires employers to collectively consult with appropriate representatives of affected employees where they are proposing to dismiss as redundant (which would include a proposal to dismiss and re-engage) 20 or more employees at one establishment within a period of 90 days or less. Case law has established that “proposing” to dismiss is less than a decision but more than a mere contemplation. It has been held that an employer may “propose” redundancies even though alternatives are also being considered. The safest course for employers, which TULRCA effectively encourages, is for employers to commence consultation at a formative stage and this would often have involved raising the prospect of dismissal and re-engagement at an early stage. If the Code is implemented it is not hard to envisage employees and/or their representatives arguing that the commencement of collective consultation at an early stage constitutes a breach of the Code by raising the possibility of dismissal “unreasonably early” and/or that it is a “threat” and/or a “negotiating tactic”.
At paragraph 32 of the Code the suggestion that an employer “should” contact Acas for “advice” is also interesting. It is not clear what this is aiming to achieve or what is meant by “advice” in the context of the Code. Does it mean the employer should seek advice on complying with its legal obligations (which it may already be doing by engaging its own legal advisers) or advice on how to reach agreement on the proposed changes (or all of these issues and more)? The Code does not say. Employers are likely to find it puzzling that, even though they may already be receiving legal advice that, in order to comply with the Code they should also seek advice from Acas.
It will also be interesting to see to what extent employment tribunals will explore the nature of the advice an employer has received from Acas, and whether it was followed, when assessing whether an employer has followed the Code.
The Code, if implemented, will provide a helpful guide to employers and employees as to the process that should be followed when an employer is seeking to agree changes to terms and conditions. However, I am concerned that the aspects of the Code discussed above will unnecessarily create new issues for employers and employees to argue about and may distract their focus from the intended purpose of the Code.
For more information or advice on this or any other Employment Law & HR issue, please get in touch with James Symons on 0115 9 100 250, or send him an email.
Posted on February 20, 2024
