This week marked the close of the Government’s consultation on its draft fire-rehire statutory code of practice. It will clamp down on controversial tactics used by unscrupulous employers who fail to engage in meaningful consultations with employees.
The practice of ‘fire and rehire’ refers to when an employer dismisses a worker and rehires them on new, less favourable terms. It should be a last resort and employers should have first made all reasonable attempts to reach agreement through full consultation. ACAS published guidance in November 2021 clearly stating this should be a last resort and therefore the 800 workers that P&O Ferries sacked on the spot without consultation, shocked the nation.
If it passes it will take stronger action against employers who use fire-rehire tactics. The code will include practical steps that employers should follow. A court or Employment Tribunal will take the code into account when considering relevant cases, including unfair dismissal. The courts will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies.
When faced with difficulties, employers should first look to bring about a mutual agreement to change contracts through effective communication, explanation, and consultation with employees. This can be achieved if the employee understands the immediate need for change for potentially even business survival.
There are many different reasons why an employer might seek to change contractual terms of conditions;
-reduce costs (salary/overtime/benefits)
-change the actual or range of working hours
-meet customer demands
-Introduce or amend shift patterns
-change working hours
-impose post-termination of employment restrictions to protect business interests
Varying the contract of employment with consent
Ideally, having employees agree to any variation to their contract of employment is the best outcome, where the business rationale for the proposed change is explained through meaningful consultation that is compliant with statutory consultation requirements as appropriate.
Variations permitted within existing contractual terms
Employers need to be wary of the length to which they can use existing flexibility clauses. For example, the clause quite often states something like ‘The Company reserves the right to make reasonable changes to your terms and conditions of employment.’ This would only be acceptable for a minor change in job role or slight change to working hours. It is highly unlikely it would be considered acceptable by an Employment Tribunal for a reduction in pay or reduced contractual benefits.
If you need to make some urgent changes to contractual terms, then we are here to help. Please contact the HPC team on 03301071037 or email contact@highperformanceconsultancy.com.