Government draft code on ‘fire and re-hire’ updated

The Government published its updated draft Code of Practice on dismissal and re-engagement (colloquially known as ‘fire and re-hire’) on 19 February 2024.

The draft Code had originally been published back in January 2023 for consultation in response to concerns that some employers had been using the practice of dismissal and re-engagement unethically – the well-publicised P&O Ferries case caused particular consternation.

What has been updated in the Code?

Whilst the Code is largely similar to the original draft, there are some important new differences. Key points to be aware of include:

  • The Code now recommends that an employer should contact Acas first before raising the prospect of dismissal and re-engagement.
  • Employers are advised not to raise the prospect of dismissal and re-engagement “unreasonably early” or “use it as a negotiating tactic to put undue pressure on employees”.
  • Employers are encouraged to “consult for as long as reasonably possible in good faith”.
  • The Code now makes clear it does not apply where the only reason envisaged for dismissal is redundancy.
  • Employers should “re-examine” their proposals if it becomes clear employees do not agree to the proposed changes, taking into account the feedback received. Once they have done this, they should only proceed with dismissal and re-engagement as a “last resort”.

Standalone claims cannot be brought under the Code but failure to follow it can be taken into account by a court or tribunal. A tribunal will have the power to increase any award by up to 25% if it considers an employer had unreasonably failed to follow the Code.

When will the code come into force?

It is expected that the updated draft Code will come into force in summer 2024.

Significantly, the Labour party has pledged to ban the practice of dismissal and re-engagement if it comes to power.

Implications for TPS consultations

The most significant impact of the Code for independent schools is likely to be in relation to consultations on the Teachers’ Pension Scheme (TPS).  

Utilising the option of dismissal and re-engagement is the only way of guaranteeing a change in contractual terms where staff object and so this has been the standard approach since 2019 in consultations on leaving the TPS (or changing terms in relation to it). However, it has met with increasing opposition from teachers and their unions. Most recently, unions have responded to notification of the dismissal and re-engagement option with swift ballots for strike action, arguing that it is their “leverage” that they need to retain if schools attempt to push through their proposed changes.

The updated Code is clear that the prospect of dismissal and re-engagement should not be raised unreasonably early. This means schools commencing the TPS consultation process this Summer Term will need to think very carefully about whether to notify teachers of the risk of dismissal at the outset of the consultation; or instead only raise the possibility when it is clear an impasse in negotiations has been reached.  

The latter, softer approach to consultation is likely to be much better received by staff.  However, it does create the potential for consultations to over-run as the dismissal and re-engagement process comes with strict consultation time limits if 20 or more staff are at risk of dismissal. If the clock on those time limits is only started after an already extensive consultation period then consultations could easily spill into the following term, delaying the implantation of any cost control measures in relation to the TPS. Governors will need to weigh up their approach carefully with advisers in the consultation planning phase.

How Moore Barlow can help

Moore Barlow are trusted legal advisers to senior leaders and governors of leading independent schools of all shapes and sizes, providing advice and support on all the key legal and strategic issues arising from normal operations and plans for future development and expansion.

Please contact our Independent schools team with any question you may have in relation to the TPS.