New Code of Practice on ‘Fire and Rehire’ Now in Effect


As of 18th July 2024, the statutory Code of Practice on ‘Fire and Rehire’ officially came into force. However, its long-term application remains uncertain.

The Department for Business & Trade has introduced the Code of Practice on Dismissal and Re-engagement, which employment tribunals are now required to consider in relevant cases, such as those involving unfair dismissal.

Key Provisions of the Code

The new code grants tribunals the authority to increase compensation by up to 25% if an employer unreasonably fails to adhere to its guidelines.

Employers are advised to use ‘fire and rehire’ as a last resort. The code emphasises the need for consultation with employees for “as long as reasonably possible,” although it does not specify a minimum consultation period.

Best Practices:

  • Employers are encouraged to engage with the conciliation service Acas early in the process and to explore alternative solutions before considering re-engagement under reduced terms and conditions.
  • If initial proposals are not agreed upon, employers should reassess them and consider feedback from employees and their representatives.
  • Once terms are agreed, employers should implement changes gradually rather than all at once.
  • The code explicitly forbids using dismissal threats to pressure employees into accepting new terms.

The introduction of this code follows criticism of practices by companies like P&O Ferries, which used ‘fire and rehire’ tactics to lower wages and reduce costs.

Union Response and Future Developments

When the draft code was published, unions criticised it for being insufficiently stringent and failing to deter unscrupulous employers. Despite the code’s implementation, the new Labour government has committed to eradicating ‘fire and rehire’ practices altogether, suggesting that further revisions or a replacement of the code may be forthcoming.

This evolving regulatory landscape underscores the importance for employers to stay informed and adaptable in their approach to employee management and dispute resolution.