The King’s Speech, delivered on 17 July 2024, set out several proposals from the new Labour government.
Among such proposals was the Employment Rights Bill, which included a commitment to ‘ending the scourges of ‘Fire and Rehire’ and ‘Fire and Replace’.
Below, our Manufacturing and Employment Lawyers examine this pledge in more detail and consider its potential implications for the manufacturing sector.
The term ‘fire and rehire’ relates to a distressed employer dismissing employees and offering to rehire them on revised terms, which are typically less favourable to the employee, usually in an attempt to cut outgoings.
The current Code of Practice came into force on 18 July 2024, following P&O Ferries' dismissal of approximately 800 staff members in 2022.
Within the code, it was established that employers looking to alter the terms and conditions of employees’ employment contracts should only use fire and rehire as a ‘last resort’.
It set out that employers ought to consider alternative solutions and hold ‘meaningful consultation’ to agree upon an outcome with their employees and/or employees’ representatives.
Employers should ‘share as much information regarding the proposals as reasonably possible’ and ‘consult for as long as possible’.
However, the law on the use of the practice remained the same.
Failure to follow the code would not directly result in liability.
However, the code is admissible in evidence in proceedings, and Tribunals now have the authority to increase awards by up to 25% if the employer in question unreasonably fails to comply with the code.
When acting as The Opposition, Labour was critical of the current code for not going far enough.
Following their election victory, Labour is setting out to reform the law to provide effective remedies and replace the Conservative Government’s ‘inadequate’ code.
As such, Labour plans to introduce a ‘strengthened version’ of the code once new legislation on fire and rehire practices are introduced.
However, it remains to be seen whether the reform to fire and rehire practices will see a ban on their use or simply further increase compensation.
Given the historic practice of fire and rehire in the manufacturing sector, any reform to their use would likely impact the industry.
In June 2024, it was reported that over 550 Unite members employed by Oscar Mayer were to be balloted for strike action due to the manufacturer’s alleged fire and rehire plans.
Further, Envases Liverpool, a tin can manufacturer, was set to face strikes in June 2024 over the fire and rehire plans before the dispute was resolved following negotiations.
Employers in the manufacturing sector must carefully monitor any changes to the law surrounding fire and rehire practices, as this process may no longer be considered a last resort.
Further restrictions on the use of ‘fire and rehire’ may mean distressed employers are less able to cut costs through other means and may leave redundancies as the only solution to achieve this result, which would presumably be an unintended consequence of reforming the practice of ‘fire and rehire’.
For more advice regarding Labour's new employment plans and how it may affect your manufacturing business, contact our Manufacturing Solcitors and award-winning Employment Lawyers on:
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Jack has over 7 years of experience acting as an Employment solicitor. Jack has specialist expertise in redundancy, disciplinary and grievance procedures, terminations, settlement agreements and restrictive covenants.
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