25% Protective Award Uplift for Failure to Follow Dismissal and Re-engagement Code

Employers who fail to follow the new Dismissal and Re-engagement Code of Practice could find themselves having to pay increased protective awards. The Government has published draft legislation which gives employment tribunals the power to increase a protective award by up to 25% where an employer has unreasonably failed to follow the Code.

What is dismissal and re-engagement and when will the Code of Practice apply?

The Code of Practice is expected to be in force from July. It will apply where an employer wishing to make changes to one or more employees’ employment contracts, envisages that they might opt for dismissal and re-engagement if the employees do not agree to the changes. Dismissal and re-engagement, sometimes referred to as ‘fire and re-hire’, involves terminating the employment contract and offering re-engagement on the revised terms. You can read further information about the new Code and its requirements here.

What are the implications on collective consultation and protective awards? 

Where an employer proposes to dismiss 20 or more employees at one establishment within a period of 90 days or less, collective redundancy consultation obligations will apply, meaning that employers will have to consult with employee representatives about the proposed dismissals in good time and at least 30 days before the first dismissal takes effect. This increases to 45 days if 100 or more dismissals are proposed.

An employment tribunal can award a protective award of up to 90 days’ actual gross pay per affected employee if it finds that an employer has failed to comply with its collective consultation obligations. Protective awards are therefore already an expensive liability for employers and the new power to increase awards by up to 25% means they could be even more costly.

When will the Code of Practice come into effect?

The legislation is scheduled to come into force on 18 July 2024 and we can therefore expect the Dismissal and Re-engagement Code of Practice to be in force from that date as well.

For information on how we can support you with changing employees' terms and conditions of employment, please contact a member of our Employment team.