Employment Law: Variation of Contract - 'Fire and Re-hire' | February 2023

Employment Law: Variation of Contract - 'Fire and Re-hire' | February 2023

The current law is that neither party has the right to unilaterally change a Contract of Employment - such terms can be changed only if the parties agree to the change or the change is in accordance with a term contained within the contract. More often than not, this is the way the vast majority of employers approach this area.

Some employers however, have reverted to ‘Fire and Re-hire’ whereby an employee is dismissed and re-engaged on new terms. This course of action, however, does come with a number of risks attached to it.

If the employer does go down this route, it would normally be via a redundancy dismissal. Alternatively, TUPE may be appropriate when introducing any changes (measures) -  however, both of these options would require collective consultation with the employees affected by such changes.

In 2022, the government announced its intention to introduce a new statutory Code of Practice related to dismissal and re-engagement and in January 2023 the Department for Business, Energy & Industrial Strategy published a Draft Code of Practice on Dismissal and Re-engagement.

The purpose of the Draft Code highlights the employers right to make economic decisions for the benefit of the business, yet also acknowledges that this can lead to conflict if the employer seeks to vary the terms without the employees agreement. The Draft Code seeks to ensure that employers engage in meaningful consultation and seek an agreed solution. It is clear within the scope of the Draft Code that it does not apply where there is a reason for redundancy as defined in the Employment Rights Act 1996.

The Draft Code does not impose legal obligations on an employer, but it is intended to be admissible in evidence in proceedings before a court or employment tribunal. In doing so, it is proposed a tribunal can increase or decrease awards by up to 25% where either party has been unreasonable.

The key elements of the Draft Code are set out as follows:

  • Purpose and Scope
  • Role of Trade Unions/Employee Representatives
  • Reconsidering the Need for Changes
  • Providing Information for Employees
  • Consultation
  • Changes that are Agreed
  • Unilateral Imposition of New Terms
  • Dismissal and Re-engagement

Click here to view the Draft Code 

Consultation on the Draft Code opened on 24th January2023 and are still open until 18th April 2023. Comments can be made via this online survey:


NB: This information is for general guidance only and is not legal advice. It should not be regarded or relied upon as a complete or authoritative statement of the law. However, if you have any HR issues on this or any other HR matters and would like to talk them through with our team, please contact us.

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