Government consulting on Statutory Code of Practice on Dismissal and Re-engagement
Many of our clients periodically consider changing terms and conditions of employment, which ideally happens in agreement with employees. However, where some or all employees refuse to agree to new terms, employers can terminate the old contracts on notice and offer employment on the new terms on expiry of notice. This, of course, is open to the risk of unfair dismissal and we recommend that any employer considering this tactic does so with legal advice.
The government has recently published a consultation on a draft Statutory Code of Practice on Dismissal and Re-engagement (“Code”) to help employers with changing terms. The Code sets out a step-by-step process that an employer should follow to explore alternatives to dismissal and to try and find an agreed solution with trade unions, employee representatives or directly with affected employees through meaningful consultation. The Code makes it clear that employers should not use threats of dismissal as a negotiating tactic, and that employers should not consider unilaterally changing contractual terms unless they are satisfied that all reasonable alternatives have been fully explored first. In other words, dismissal and re-engagement is an absolute last resort.
In the event dismissal and re-engagement is the only reasonable option, the Code advises employers to give as much notice as possible of the dismissals, and considering whether any particular employees might need longer notice to make arrangements to better accommodate the changes. The Code will not have any legal force, but employment tribunals will be required to take it into account when considering relevant cases. Tribunals will be able to increase an employee’s compensation by up to 25% if an employer has unreasonably failed to comply with the Code.
The consultation closes on 18 April 2023 and the finalised Code will be brought into force when Parliamentary time allows.
If you have any questions regarding the proposed Code, or you are considering dismissal and re-engagement and need advice, please get in touch with one of our team.