Your client has already taken the first step, in discussing this with their employees. Consultation is critical in any process that involves contractual changes – as you no doubt will have seen in the coverage on the P&O mass firings, failure to do this can land an employer in financial as well as reputational hot water.
Where mutual agreement cannot be made, employers can begin a process known as ‘fire-rehire’, where employees are dismissed from their contractual terms and offered immediate reengagement (so that length of service is maintained) on new terms.
In November 2021, ACAS published guidance which highlighted employers should only consider this as a last resort, where changes are critical and voluntary agreement isn’t possible. Before doing so, they must have made all reasonable attempts to reach an agreement through full consultation with affected staff members and their representatives in a genuine and meaningful way.
The P&O case sparked much interest in this process, resulting in plans to introduce a new Statutory Code of Practice for employers using fire and re-hire tactics in March 2022. This will include practical steps to follow in these situations, such as minimum consultation period and number of meetings to hold; information to communicate with employees and their representatives; notice requirements for meetings and before introducing changes; and the grounds considered as reasonable for implementing changes in the first place.
The Government will consult on the draft Code later this year and bring it into force as soon as parliamentary time allows. For now, businesses can continue to utilise fire-rehire approaches where necessary, but they must understand the need to properly consult with affected staff and the risks to the organisation if they don’t. Tribunals are likely to become stricter when evaluating fire-rehire situations and be less lenient when considering the process employers followed to enforce changes to contractual terms.
Changing terms and conditions can be a lengthy process but should your client take the time to do so properly, they will reap the rewards. Effective consultation can maintain workplace relations, allowing staff to understand the reasons behind proposed changes and enables them to give their views. This helps build trust and find a workable solution. Tensions can arise if employees feel that they have not had the opportunity to inform decisions or do not support the changes. This can result in staff feeling less committed, impact an organisation’s performance and increase the risk of tribunal claims.
When claims are raised to the employment tribunal, the judge will refer to statutory codes when deciding the level of award. Once this code is in force, your clients may face paying out up to 25% more in compensation for not following the process within it.
In order to demonstrate the seriousness of the matter, it is recommended that your client puts together a robust business case on the current situation of the business, the reasons changes need to take place, what those changes are, and what alternatives have been considered. This business case can then be used during consultation to explain and justify the decision your client has taken. Only then would it be advisable to move to dismissal (with notice) and the offer of reengagement.
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