After the recent large-scale redundancies carried out at P&O Ferries, The Government announced plans to introduce a Statutory Code of Practice for employers to prevent this happening again in the future.
What this means is that employers will be under stricter practices when employing people and that means more regulations that employers must be made aware of as employee rights are effectively increased.
We shouldn’t act surprised…
The use of such practices have been criticised for years, so to see introductions of this kind wasn’t entirely unexpected. In November 2021 ACAS published new guidance stating that employers should only consider dismissing and rehiring as a last resort, in other words when changes are critical and voluntary agreements are not possible. This is once they have considered all available options and attempted to resolve through the consultation process.
why consultation important?
Whilst no employer wants to undertake a consultation process, they can be effective in supporting good employment relations as employees are able to understand the reasons behind the proposed changes and allows them to raise any concerns that they may have.
Issues tend to arise when employees don’t feel included and they feel that they don’t have a say, this leads to demotivation and disengagement.
what’s the risk to my business?
When claims are presented to the employment tribunal, the judge will refer to statutory codes when deciding the level of award an employee is entitled to. The most common statutory code is the ACAS Code of Practice on Disciplinary and Grievance Procedures. However, the new fire-rehire Code will lay new consideration for employment tribunals to examine. This means an employer may face paying out up to 25% more in compensation for not following the process set out in the Code, which means employers need to take further steps to treat employees fairly and work to protect their businesses from such claims.
what’s next?
The Government will be consulting on the draft Code later this year and will bring it into force as soon as parliamentary time allows. For now, businesses can continue to use fire-rehire approaches where necessary, but it’s important they understand the need to properly consult with affected staff members and the risks to the organisation if they don’t. In coming months, tribunals will likely be stricter when evaluating fire-rehire situations and be less lenient when considering the process employers followed to enforce changes to contractual terms.
How do I protect my business?
If you need advice on this or any other employment issue, contact us before taking any action, it can help you prevent any costly mistakes (even if well intended!)
