If you’re looking to make changes to employment contracts and an employee refuses those changes, one approach you can take is to terminate their employment and rehire them on the new terms. A new statutory code of practice is to be introduced (date to be confirmed) providing greater governance over this approach.
What will the new code mean in practice? The detail is yet to be announced – all the government have said is that the intention is to provide practical steps for employers to follow to ensure they engage in meaningful consultation when changing terms and conditions are changed. If employers fail to follow the code tribunals will have more clout when issuing compensation. This will mean:
Tribunals will need to take into account whether an employer has followed the code and employers should be ready to evidence that they have done so; and
Tribunals may apply a 25% uplift in compensation if an employer unreasonably fails to comply with the code.
The new code will not be an outright ban on the use of ‘fire and rehire’ meaning it will remain an option for employers to change contractual terms where voluntary agreement is not possible or there is no other alternative.
There’s always lots to consider when making changes to contracts – getting the right advice can help to minimise as much risk as possible. Get in touch for our support.
This update is accurate on the date it was sent (03 May 2022), but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.