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Fire and rehire Could a new Code protect workers?

Last spring there was an uproar nationally when P&O ferries made mass redundancies and then hired new workers on less favourable terms. This is not an isolated example.

In December 2022, the shopworkers union Usdaw was given the go ahead by the Supreme Court to challenge  Tesco on its use of fire and rehire of staff on less favourable terms. Staff at its warehouses in Daventry and Litchfield were dismissed but the retailer offered to rehire them on lower pay.  The supermarket says this relates to a promise of ‘retained pay’ which was put in place in 2007 to help with staff retention and which it now argues was only in place for the duration of the contracts the workers signed.  Tesco has phased out this payment which it says was only received by a small number of people.

MPs could have chosen to legislate to prevent this practice, but a Bill tabled failed in the House of Commons as the government has argued that businesses who are in serious financial difficulties should have the ability to offer staff new jobs on new terms, if the alternative is the closure of the business.  There have been calls for a new statutory code of practice, which it’s anticipated could be published later this year.

The new code is expected to require businesses to hold ‘fair, transparent and meaningful’ consultations with their employees in relation to proposed changes to their employment terms.

For businesses that don’t comply, the Courts and Employment Tribunals will in the future take into account the code and they will have the ability to increase an award by up to 25% in instances where the code hasn’t been followed
by the employer.

Ultimately there may be times when employers need to review and alter pay and conditions for staff and the message in the future will be to be open, fair and consult first.

If you would like to discuss your terms of employment, get in touch with our team today.