Ashley Matthews is an affiliate within the employment crew at Thomson Snell & Passmore
Regardless of being a fast-growing sector, development should take care of a labour scarcity, rising materials prices and mission delays. Pricey tribunal claims, lack of workers and reputational injury put pointless – and probably deadly – stress on companies’ already tight margins. In consequence, some misuse the controversial follow of ‘fireplace and rehire’ to power modifications to staff’ phrases and circumstances, maintain employees employed on initiatives and cut back prices.
To restrict the usage of such ways, the Conservative authorities developed a statutory code of follow on dismissal and re-engagement. As of 18 July, the code is now in power. Building companies might want to handle employment relations and guarantee they’ve the required infrastructure to adjust to the code.
What’s ‘fireplace and rehire’?
An employer isn’t often capable of make modifications to an worker’s contract with out their settlement. When an worker refuses to agree, the employer would possibly resolve to dismiss them and supply to re-engage them on new phrases.
“Building companies that observe the code will construct a fame pretty much as good employers, which is able to assist them to win and retain expertise”
This follow already poses a monetary and authorized danger to employers, which is why it’s often solely used as a final resort, comparable to when dealing with redundancies or enterprise closure, or by giant firms that view it as a manageable danger. Whereas the specter of elevated compensation awards might deter some employers from misusing the follow, it’s unlikely to discourage all.
There are additionally employers that may use the specter of fireplace and rehire as a negotiation tactic to power the hand of staff, with none intention of following by means of: the risk could also be sufficient to get them to conform to new, much less beneficial phrases moderately than make a futile stand to withstand them.
The follow itself isn’t unlawful nevertheless it does danger reputational injury, weaker worker relations and claims of unfair dismissal. For instance, one agency was accused by the union Unite in December 2021 of being ‘a Scrooge employer’, when it was rumoured that the enterprise was planning to fireplace and rehire greater than 1,500 employees.
New code of follow
The code units out to strengthen good employment practices and condemns the misuse of fireside and rehire. It units out sensible steerage and accepted requirements for employers when making modifications to staff’ phrases and circumstances. The code additionally applies to the follow of ‘fireplace and exchange’, which is the place staff are fired and new workers are employed on much less beneficial phrases.
If employers unreasonably fail to observe the code, an employment tribunal may improve compensation awarded towards them by as much as 25 per cent. If an worker unreasonably fails to adjust to the code, their compensation could also be lowered by 25 per cent.
The code doesn’t prohibit the follow of fireside and rehire, nevertheless it does verify that it ought to solely be used as a final resort, after taking all affordable steps to discover options to dismissal and interesting in significant session. It units out a roadmap for employers to observe to hold out the method pretty, together with:
- Offering staff with info concerning proposals
- Conducting significant session
- Contacting dispute-resolution service ACAS for recommendation earlier than elevating the prospect of dismissal and re-engagement with staff
- Re-examining the proposals
- Outlining the dangers and suggestions if (1) modifications are agreed, (2) the employer decides to unilaterally impose new phrases or (3) the employer decides to dismiss and re-engage the worker
If adopted, the code ought to result in fairer and extra equitable outcomes for workers. Early and in depth session by employers will present a major shift in direction of a extra proactive collaborative method to employment relations. Moreover, development companies that observe the code will construct a fame pretty much as good employers, which is able to assist them to win and retain expertise in a aggressive job market.
The long run for the code post-election
Labour has been crucial of the code and asserted in its common election manifesto that, in authorities, the get together would exchange it with a ‘strengthened’ code of follow. It stays to be seen what modifications shall be made to the code. However the brand new authorities has dedicated to introducing an Employment Rights Invoice in its first 100 days, a part of which is able to look to finish “the scourges of ‘fireplace and rehire’ and ‘fireplace and exchange’ by reforming the legislation to supply efficient treatments and changing the earlier authorities’s insufficient statutory code”. So we’ll discover out quickly.
