Restrictions on Fire and Rehire

The new legislation proposed by the Labour Party in the Employment Rights Bill aims to significantly restrict the practice of fire and rehire, a pernicious tactic used by employers to reduce wages or place employees on less favourable terms by dismissing employees only to rehire them on less favourable terms. This practice has been under intense scrutiny, particularly following the P&O Ferries scandal in March 2022, where approximately 800 workers were dismissed without notice and subsequently replaced. This incident highlighted the urgent need for more robust legal protections against exploitative practices. In particular the P&O scandal highlighted that the low level of compensation available in such cases meant that for employers sometimes it makes economic sense to breach employment law, as the savings from the unlawful action outweigh the levels of compensation they may have to pay. Only greater sanctions for such acts will prevent this.

Key Provisions of the New Legislation

1. Stricter Controls: It is anticipated that the new legislation will seek to impose stringent controls on dismissal and re-engagement practices. It’s likely that employers will be required to demonstrate that any changes in terms and conditions are essential for the viability of the business and that all alternatives have been thoroughly explored before resorting to fire and rehire. This measure would aim to ensure that such drastic steps are only taken when absolutely necessary and not as a cost-cutting measure at the expense of workers' rights. For the new legislation to be effective its vital that this aspect is got right by the government and we eagerly await the detail in the bill when published.
2. Enhanced Consultation Requirements: Employers will be mandated to engage in meaningful consultations with employees and their representatives before implementing any changes. This involves exploring all possible alternatives and providing a clear rationale for the proposed changes. The goal is to foster a collaborative approach and ensure employees are treated fairly throughout the process.
3. Effective Remedies: Labour has pledged to provide effective legal remedies for workers affected by fire and rehire practices. While the specifics are yet to be detailed, the emphasis will be on ensuring that workers have access to justice and that employers who engage in such practices face significant penalties. This move is expected to deter employers from using fire and rehire as a tool for restructuring.
4. Replacement of the Current Code: Labour needs to revise the existing statutory code of practice, which comes into force on 18 July 2024. They plan to replace it with a stronger version requiring more than just a 'substantial reason' for changing employment terms. This new code will set higher standards for employer conduct and ensure greater worker protection.

Impact on Employees and Union Representatives

This legislation offers employees a much-needed safeguard against unjust dismissals and rehiring on poorer terms. It ensures job security and fair treatment, particularly during periods of economic uncertainty or business restructuring. Employees can feel more confident that their rights will be protected and not be unfairly targeted for cost-saving measures.

Union representatives will play a crucial role in enforcing and overseeing these new regulations. They will be monitoring employer practices and ensuring that any proposed changes are genuinely necessary and justified. Unions will also be pivotal in representing employees during consultations, ensuring their voices are heard and their rights upheld.

The involvement of Thompsons Solicitors in the P&O Ferries case underscores the importance of legal expertise in protecting workers' rights. Our firm remains committed to standing up for employees and ensuring such injustices do not go unchallenged. The new legislation aligns with our mission to provide robust legal support to workers and their representatives, ensuring that employment practices are fair and equitable.

In conclusion, the proposed restrictions on fire and rehire represent a significant step forward in safeguarding workers' rights. Labour's Employment Rights Bill should aim to create a more just and secure working environment for all employees by mandating thorough consultations, setting stricter controls, and providing effective remedies. Thompsons Solicitors will continue supporting and advocating for these vital changes, reinforcing our commitment to social justice and protecting workers' rights.