Government Consultation on Dismissal and Re-engagement

Louise Walker
Louise Walker
Legal Director
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The Government has recently issued a statutory consultation on a Draft Code of Practice on Dismissal and Re-engagement which sets out detailed employer responsibilities when an employer is proposing to change employment terms and conditions and where there is the prospect of dismissal and re-engagement.

The draft Code of Practice, and guidance on how to participate in the consultation, can be accessed here. The consultation period ends on 18 April 2023 and the Government are inviting all interested parties (which we are sure will include many employers) to submit their views for consideration before this deadline.

Some points to note on the draft Code are set out below:

  • The draft Code provides practical guidance to employers and employees when employers want to make changes to employees’ contracts of employment, and where the employer envisages that if employees do not agree to the proposed changes, they may dismiss the employees, and either offer them re-employment on the proposed new terms, or engage new staff to perform the relevant roles;
  • The draft Code sets out requirements as regards the provision of information to employees during such consultation processes and provides guidance on what is expected of the employer when approaching the consultation itself. It also sets out expectations upon the parties in the event that changes are agreed, and provides guidance on the various options that may be considered by an employer if it has not been possible to reach agreement with the employees or their representatives.
  • The draft Code is not proposed to impose legal obligations, nor will a failure to observe the terms of the Code, of itself, result in liability. However, actions or steps taken in respect of the Code, or failure to do so, would be admissible at the Employment Tribunal (for example, where an employee who is dismissed for failing to agree to a proposed change to terms and conditions subsequently raises an unfair dismissal claim).
  • It is proposed that the Employment Tribunal must take the Code into account and the Employment Tribunal would be given discretion to uplift any compensatory award made to an employee by up to 25% if an employer has unreasonably failed to comply with the Code (similarly, the Employment Tribunal will have discretion to decrease any award by up to 25% if it is the employee that has unreasonably failed to comply). The prospect of an enhanced compensatory award being made against employers will inevitably need to be taken into account when an employer is preparing for and embarking upon a consultation process relating to proposed changes to terms and conditions, where potential dismissals are on the horizon if changes cannot be agreed.
  • The draft Code states that once it is clear that employees are not prepared to accept the proposed changes without further negotiation, but where the employer has decided that it still needs to implement those changes, the employer would be obliged to re-examine its business strategy and plans in light of the potentially serious consequences (that is, the imposition of changes without agreement, or dismissal and re-engagement) for the employees.

We will report on the outcome of the consultation on the Code in due course, but if you have any questions about these proposals, or any other employment law matter, please do not hesitate to contact a member of the team on 0141 331 5150.

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