The Employment Rights Bill will make it automatically unfair to dismiss an employee if the...
Fire and rehire
The Employment Rights Bill will make it automatically unfair to dismiss an employee if the principal reason for dismissal is that the employee refused to agree to a variation of contract sought by the employer.
It will be automatically unfair to dismiss an employee:
- for failing to agree to a change to their terms and conditions of employment or
- to re-engage them (or someone else) under varied terms and conditions of employment, but where the role is otherwise substantially the same
The only (narrow) exception will be where the reason for the variation was to eliminate, prevent or significantly reduce/mitigate the effect of any financial difficulties which, at the time of the dismissal, were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on its business, and there was no way the need to make the variation could reasonably have been avoided.
Even where the exception does apply, the dismissal could still be ordinarily unfair, even if not automatically unfair. The Bill provides that in such cases various matters must be taken into account by a tribunal when determining whether the dismissal is fair or not, including any consultation with the employee and any trade union or employee representatives about the proposed variation and anything offered to the employee in exchange for agreeing to the variation.
When these changes come into force, the current statutory code of practice on dismissal and re-engagement will need to be replaced. The code prescribes the process to be followed by employers before dismissing and offering to re-engage in any circumstances. A breach of that process does not give rise to a legal claim in itself but may lead to an uplift of 25% to any compensation awarded in related claims.
The government has also committed to consulting on lifting the cap of 90 days’ pay on any protective awards made to employees for failures of collective consultation in respect of fire and rehire dismissals, and allowing employees to apply for interim relief (i.e. an immediate hearing where a possible outcome would be to preserve old terms and conditions pending a final hearing) which is currently only available for whistleblowing and trade union dismissals.