The government has launched a consultation on a statutory Code of Practice on Dismissal and Re-engagement. The consultation closes on 18 April and the finalised Code will be brought into force when Parliamentary time allows.
The draft Code sets out the steps that an employer should take whenever it considers that it wants to make changes to employees' contracts of employment and then, if the employees do not agree to those changes, envisages that it might dismiss them and either offer re-employment on the new terms or engage new employees to perform the relevant roles on the new terms. If the employees will not agree to the terms without negotiation the Code states that the employer should re-examine its business strategy and plans in light of the potentially serious consequences for employees. Amongst the things for the employer to take into account are the negative consequences of acting unilaterally (reputational risk and damage to industrial relations) and whether there are alternative ways of achieving the same objectives.
If the employer decides to go ahead with changes to terms and conditions the Code recommends that it should share as much information regarding the proposals as is reasonably possible, and engage in meaningful and good faith consultation. Any alternative proposals made by the employees should be considered, and the employer should be prepared to engage in a genuine exploration of whether they are workable or will meet the employer's objectives.
The draft Code warns against using a threat of dismissal only as a negotiating tactic where the employer is not in fact contemplating dismissal as a means of achieving its objectives. However, it states that an employer who has participated in a thorough and open information and consultation process, has listened carefully to and explored fully any alternative proposals, and has concluded that it still needs to make changes to employment contracts, might consider dismissal and re-engagement as a last resort. When this is the case, it should give as much notice as possible of the dismissal, and consider whether any particular employees might need a longer period of notice so that they can make arrangements which enable them to accommodate the changes.
A failure to follow the Code will not give rise to any standalone claims, but it will be admissible in evidence in proceedings before a court or employment tribunal and any provision of the Code which is of relevance must be taken into account. If the claim concerns a matter to which the Code applies then a tribunal can increase any award it makes by up to 25% if the employer has unreasonably failed to comply with the Code. It can also decrease any award by up to 25% where the employee has unreasonably failed to comply with the Code.
