Dismissal and re-engagement, also known as ‘fire and rehire’, refers to when an employer fires an employee and then offers them a new contract with new – usually less favourable – terms and conditions. There are a lot of reasons a business may want or need to achieve a change in terms and conditions for staff however this practice has been controversial for a while now, and last week the Government announced the first step in how they plan to curb employers using this tactic. 

What is the updated Code of Practice?

Due to come into force in late 2024, a new ACAS code of practice has been drafted, intended to give employers practical guidance where they are considering fire and rehire.  

So, what do HR professionals need to know? Here’s the latest: 

• Employers must explore alternatives for dismissal before they go down the fire and rehire route 
• Employers must hold meaningful consultation with either Trade Union’s (where recognised), collective reps, employee reps or employees individually depending on the specific circumstances. Vista have a huge amount of experience in dealing with industrial relations issues and collective bargaining so please do drop us a line if you are looking for support.  
• Employers mustn’t raise the prospect of fire and rehire unreasonably early in the process. Also they must not use it as a threat if there is no intention to go down this route at all. 
• There is a completely new obligation on employers to contact ACAS before raising the prospect of fire and rehire as a way of achieving a change to terms and conditions. This one is completely new and has never been required of employers before. 

Overall, the new Code’s intention is to make fire and rehire a last resort.  

Where does it apply? 

This new guidance will apply in any situation where an employer is contemplating dismissal and re-engagement to achieve a change to terms and conditions. There is no minimum number of employees affected (it can be one employee or 20+) and it doesn’t create a separate legal right in the Employment Tribunal. But what the Employment Tribunal can do, if in these circumstances one or the other side hasn’t followed the Code of Practice, is uplift or reduce the award by up to 25%.  

What do HR need to think about now?  

Our Employment Law team’s top tips for right now?  

1. Familiarise yourself with the code, especially the new requirement to notify ACAS.
2. Diarise it – its due to come into effect in autumn this year 
3. Sign up to our webinar ‘Fire & Rehire: What HR need to know and why plan now’, or our employment law updates and resource hub where we will keep you posted on all the developments.  

If you need legal support on this topic, please contact our employment law team below.