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Employers who fail to follow the dismissal and re-engagement code of practice may find themselves having to pay increased protective awards.

A draft statutory instrument will, from 20 January 2025, give tribunals the power to increase a protective award by up to 25% where an employer has unreasonably failed to follow the code.

The dismissal and re-engagement code of practice will not apply where an employer is only considering statutory redundancies (where the employer’s need for employees to do a particular type of work or at a particular place has reduced). However, if the employer is considering making changes to terms of employment and it envisages that, if the changes are not agreed, it might opt for dismissal and re-engagement, the code will apply for as long as that possibility is on the table.

Where an employer proposes to dismiss 20 or more employees at one establishment within a period of 90 days or less, collective redundancy consultation obligations apply, meaning that employers have to consult with employee representatives about the proposed dismissals in good time and at least 30 days before the first dismissal takes effect. This increases to 45 days if 100 or more dismissals are proposed. Under the code of practice, there is no minimum number of affected employees required for it to apply.

A tribunal can award a protective award of up to 90 days’ actual gross pay per affected employee if it finds that an employer has failed to comply with its collective consultation obligations. What is already an expensive liability for employers, could become even more costly.