Revisions to statutory dismissal and re-engagement Code provide welcome simplification (UK)

This week saw the issue of what will probably be the final version of the Government’s statutory Code of Practice on dismissal and re-engagement.  This follows the consultation on an earlier version which we covered here. 

The new Code comes accompanied by some Guidance which is an unusually, in fact disconcertingly, helpful summary of the changes which have been made (and not) and the reason for them.  In no particular order:-

1. The Government has rejected suggestions made via that consultation that the employer should only be able to fire and re-hire where it is in financial difficulties.  The original draft Code required it to conduct a reassessment of its initial imperative to change terms by dismissal if staff would not agree, and to decide only then if dismissals were “truly necessary”.  The modified version winds this back as inconsistent with the ordinary unfair dismissal rules, as these only require that the employer should act reasonably.  It has never been a prerequisite of a fair redundancy that the employer has to show that something hideous will happen if it doesn’t dismiss.  Therefore it makes no sense to impose such a burden where it is not actually proposing to lose the employee at all, merely to change his terms. 

2. Some effort will still have to go into showing that dismissal and re-hire is a “last resort”, but there is no suggestion that this means that it must be the difference between the life and death of the business.  The Employment Tribunals are simply not equipped to rule on questions of that sort or to second-guess the employer’s professional assessment of the commercial realities it faces. 

3. The initial proposal also required the employer to reconsider both its plans for dismissal and re-engagement and its wider business strategy in the light of any push-back received from affected employees.  The consultation has concluded that “business strategy” is too wide (who knew?) and the obligation to look again now only applies to the specific plans around fire and re-hire.  That would of course be a necessary part of good faith consultation anyway. 

4. The consultation also asked for views on whether the Code would promote improvements in industrial relations in disputes over changing contractual terms, and on whether it struck the right balance between business flexibility and employee protection.  So far as you can have a blizzard of criticism out of the paltry fifty responses which the consultation received, it got one, blowing in unhappy comment from every point on the industrial compass.  The Government has obviously decided that any measure which can upset everyone equally can’t be that bad.  It has therefore marked its own homework on these two questions and unsurprisingly got an A on both counts, claiming an extra gold star for doing all the work to simplify the language and remove the serial duplications which should have been done first time round. 

5. One of the questions we raised in our look at the draft Code in January 2023 was how to square the advice in two consecutive sentences (i) to be open with employees about the possibility of dismissal and re-engagement if agreement could not be reached and (ii) not to use that possibility as a threat.  The new Code recognises that issue and now offers a still thin but nonetheless discernible path between the two.  If the employer genuinely expects to have to dismiss and re-engage if agreement isn’t possible, it can and should be clear about that fact.  However, it should not raise that possibility unreasonably early. In practical terms that means that it should usually only do so when some bright spark among the affected employees asks what will happen if he doesn’t agree.  Even then, it should still be couched in the most hesitant of tones, a possibility but hopefully a very distant one which will never be realised.  The employer obviously shouldn’t mention dismissal and re-engagement at all if it isn’t in fact envisaging going down that route.

6. Of course, the employer may start the contract change process in the bright and sunny hope that the employees will see its point of view and agree like lambs.  The spectre of fire and re-hire and related faint whiff of mint sauce may loom only later in the process when consultation tried without it has foundered with all hands.  In those circumstances the employer can legitimately bring that possibility into the conversation even though it had been silent on the point (or even expressly discounted that likelihood) at an earlier stage.  However, a new requirement in the Code is that before any employer raises dismissal and re-engagement as a serious possibility, it must contact Acas. 

7. The new Code also removes the suggestion in the original version that consultation with staff representatives about alternatives should continue even post-dismissal.  It recognises belatedly that if dismissal was genuinely the last resort required, there can by definition be nothing else to be said on it. 

8. Last, the anticipated 25%. uplift for unreasonable failure to comply with the Code remains.  You won’t find it in the Code itself, however as it is buried in other legislation along with the uplift for flouting the Acas grievance and disciplinary code.

Overall, the revised Code does suggest that someone in Government has been listening to employers’ comments in relation to the first version, even though it could easily be said that they were only raising concerns which should have been completely obvious from the start.