The UK government has finally revealed its plan to address the controversial practice of “fire and rehire.” The Department for Business, Energy & Industrial Strategy and Department for Transport announced that a statutory code of practice would be introduced to clarify to employers that they cannot use the threat of termination to coerce workers into accepting altered employment terms.
The code will also outline employers’ obligations when seeking to modify contract terms. In cases of non-compliance, courts and employment tribunals have the authority to add a 25% increase to an employee’s compensation. The code will be open for consultation before it becomes official.
The P&O Ferries crisis sparked the proposals, and while they won’t prevent similar incidents from happening, they will make them more costly with the potential compensation increase. Nautilus and the TUC will participate in the consultation to strive for stronger provisions. Charles Boyle, Director of Legal Services at Nautilus, stated that the proposals will not prevent such incidents from happening again but will make it more expensive for employers.
The consultation response aims to enhance the provisions outlined in the code of practice.
Not everyone is best pleased with the provisions so far, with Unite general secretary Sharon Graham stating this “proposal is an insult to workers and their families.“
“This proposal is an insult to workers and their families. The government should be banning fire and rehire once and for all. But instead bullying bosses like those at P&O – who use this abhorrent tactic to boost their profits – are presented with a ‘code of practice’.
Sharon Graham, Unite General Secretary
What Happened At P&O Ferries?
The move by P&O Ferries to abruptly dismiss around 800 of their UK-based crew members through a pre-recorded zoom call on March 18 2022, has been met with widespread criticism from various political groups. During a parliamentary committee hearing on March 24 2022, the company’s CEO admitted that they failed to fulfil their legal obligation of consulting with trade unions and that they were offering compensation to the terminated workers.
The company’s disregard of the legal requirement to consult with trade unions in cases where 20 or more redundancies are proposed was widely criticised, as was their choice to replace employed crew members with cheaper agency workers whose wages reportedly fall below the UK national minimum wage. This replacement of employees with far inferior terms has brought attention to the legality of the “fire and rehire” practice.
The situation with P&O has sparked calls for new legislation from opposition parties. Parliament held an emergency vote on March 21 2022, where members asked the government to quickly pass a bill against fire and rehire practices. Conservative MPs were instructed to abstain from the vote, leaving it uncertain if political pressure would result in government action.
What Happens Next?
The next step is a consultation on the proposed statutory code of practice on “fire and rehire.” The government will consider feedback from various stakeholders, including Nautilus and the TUC, to potentially strengthen the provisions before it is officially implemented. If the code is approved, courts and employment tribunals will have the power to increase an employee’s compensation by 25% in cases of non-compliance by employers.
