Statutory Code of Practice on dismissal and re-engagement to be in force by July 2024
The Government has confirmed that the new statutory Code of Practice on dismissal and re-engagement will be brought into force by July 2024, subject to parliamentary approval.
Background
The Government committed to publishing a new statutory Code of Practice on dismissal and re-engagement (Statutory Code) in order to encourage transparent practices and meaningful staff consultation in scenarios where an employer is considering dismissing staff and offering them re-engagement on new terms. Importantly, the Code does not change the law in this area but is intended to help employers follow the current law. When the Code is in force, it will be admissible in evidence in relevant Tribunal or court proceedings. Tribunals will have the power to increase or decrease compensation by up to 25% in the event of either party's unreasonable failure to follow the Code.
Timescales
We reported in March that the Government had published the updated draft Code following consultation last year. When the updated draft Code was published, the expectation was that it would be in force by summer 2024, although that was not confirmed at the time.
Since then, the Code has been approved by the House of Lords. It was also debated in the House of Commons last week. During that debate, MPs indicated their intention for the Code to be in force before Parliament's summer recess, which starts on 23 July.
The purpose of the Code
The Government committed to publishing the Code in order to circumvent unscrupulous "fire and rehire" tactics used by some employers. The aim of the Code is to set standards for employers to hold fair, transparent and meaningful consultations on proposed changes to an employee's contract of employment. The Code sets out a step-by-step process that an employer should follow to explore alternatives to dismissal and to engage in meaningful consultation with trade unions, employee representatives or directly with the affected employees to find an agreed solution.
Next steps
It is important that employers understand the scope of the new Code before it comes into force. In particular, it will be important to consider its practical impact on consultation procedures, as well as the potential consequences of an unreasonable failure to follow the Code.
Learn more about the Code and how it may affect your business, by viewing our latest webinar on the subject.