Firms in the construction industry face scrutiny over the use of ‘fire and rehire’ practices with potential legal and financial repercussions.
- The Conservative government has implemented a statutory code to govern dismissal and re-engagement practices, effective since 18 July.
- Employers are urged to engage in meaningful consultations and to explore alternatives before opting for dismissal.
- Failure to adhere to the new code of practice could result in increased compensation penalties by up to 25 per cent.
- The code aims to foster fairer employment relations and deter the misuse of dismissal tactics in the construction sector.
In response to ongoing concerns in the construction sector, the Conservative government has introduced a statutory code of practice to govern the controversial ‘fire and rehire’ tactic. This practice involves employers dismissing staff unwilling to agree to new terms and then offering re-engagement under revised conditions. While not currently illegal, such actions pose significant legal and financial risks to companies, potentially leading to costly tribunal claims and reputational damage.
The new code of practice, effective as of 18 July, mandates that employers take comprehensive measures before resorting to dismissal. The primary objective is to ensure that dismissal is truly a last resort, and that meaningful dialogue occurs between employers and employees. Alternative solutions should be thoroughly explored, and consultation with employment advisory services like ACAS is highly recommended.
The risks associated with ‘fire and rehire’ include claims of unfair dismissal, deteriorating employee relations, and damage to a company’s reputation. An example is a firm accused by the union Unite in December 2021 of unfair practices when rumours circulated regarding the dismissal and rehiring of over 1,500 workers. The introduction of the code aims to curtail such practices and promote a more equitable workplace.
Compliance with the code could lead to a reduction in compensation awarded by tribunals if an employee unreasonably fails to comply. Conversely, non-compliance could see compensation increasing by up to 25 per cent. The roadmap laid out within this code provides detailed guidance on fair employment practices and the necessity of good communication and consultation in the workplace.
Labour’s stance on the code, as expressed in their general election manifesto, suggests they favour a more stringent approach. They propose working towards abolishing the practice of ‘fire and rehire’ and introducing an Employment Rights Bill to improve protections. While the future under a new government remains uncertain, the current code marks a significant step towards enhancing employment relations in the construction industry.
The statutory code seeks to mitigate the negative impacts of ‘fire and rehire’, fostering a more equitable construction sector.
