Latest Layoffs Reinforce Need for Fire and Re-Hire Statutory Code

Recent events have demonstrated that the Government’s draft Statutory Code on Dismissal and Re-Engagement is more necessary than ever as tales of poorly handled mass redundancies continue to hit the headlines.

Following a brutal set of tech company lays offs towards the end of 2022, 2023 has continued to see worldwide staff cuts from some of the biggest names in the industry, including Google, Microsoft, META, Twitter, Shopify, Salesforce and Zoom.  

The mass culling has resulted in tens of thousands of workers losing their jobs over the past few months, with various factors being blamed. The war in Ukraine and inflation have both been cited as reasons, as has the cost of living crisis along with an over-hiring culture during the Covid pandemic. These factors will inevitably result in mass unemployment over the coming months as companies manage those issues.

Whatever the rationale, the consensus across the board is how badly the communication with affected employees has been handled. 

Horror stories are growing on how workers found out they lost their jobs, from messages via LinkedIn to cold round-robin emails and auto shut-out of work tools and company systems. One worker only found out they lost their job when their key-card failed to let them in the building.

Currently, companies that operate in the UK need to follow redundancy procedures under UK law. The rules are governed by the Collective Consultation Process, which you can read more about in our helpful blog – What is The Collective Consultation Process?

Dismissal and Re-Engagement – New Statutory Code

The issue of how companies handle mass redundancies first came to light at the beginning of last year when P&O Ferries dismissed almost 800 members of their staff with immediate effect. The fallout from this sparked a furious debate surrounding employment law and the legality of this action.

You can read more about the P&O Ferries redundancies by clicking reading our useful blog – P&O Ferries’ Redundancies- What is the legality of mass redundancy?

On the back of this, the Government announced a new Statutory Code on dismissal and re-engagement (‘fire and rehire’) would be published. The plans aim to crack down on unscrupulous employers that use controversial dismissal tactics.

The draft Code outlines employers’ responsibilities when seeking to change contractual terms and conditions, including requiring businesses to “consult with employees in a fair and transparent way” when proposing changes to their employment terms. The Code sets out employers’ responsibilities when seeking to change employment terms and conditions, It requires employers to explore alternative options, without using the threat of dismissal to pressure employees to agree new terms.

Tribunal courts already have the power to apply an uplift or decrease of up to 25 per cent on employee compensation in certain circumstances and if an employer doesn’t follow the new code it is expected that the guideline may be extended to allow the same if Companies fail to actively consult.

A draft copy of the Code of Practice was published at the start of this year (on 24 January 2023), and the Government is consulting on it for 12 weeks until 18 April 2023. 

Business Secretary Grant Shapps said: “Using fire and rehire as a negotiation tactic is a quick-fire way to damage your reputation as a business. Our new code will crack down on firms mistreating employees and set out how they should behave when changing an employee’s contract.”

“We are determined to do all we can to protect and enhance workers’ rights across the country.”

Individuals or groups interested can participate in the consultation: Draft Code of Practice on dismissal and re-engagement.

Employment Law Solicitors 

If you are an employer and are concerned that you might need to make some of your workforce redundant, please don’t hesitate to contact one of our team. At Eric Robinson Solicitors, our highly experienced employment law team can advise employers faced with a redundancy situation to ensure they are following the proper and lawful processes.

Equally, if you are an employee who has been made redundant, but you believe that there was another reason for your dismissal or the correct procedures were not followed, we can advise you on whether you have an employment tribunal claim for unfair dismissal.

To discuss an employment law issue or dispute, don’t hesitate to get in touch with us today.

This blog post is not intended to be taken as advice; information could have changed since the article was published. If you are seeking legal advice, please get in touch with our team of solicitors to discuss your matter.