Fire and Rehire: The 2024 Statutory Code and Your Protections

Fire-and-rehire (formally "dismissal and re-engagement") happens when an employer dismisses an employee from their existing contract and immediately offers re-employment on new, usually worse terms. Common triggers: cost reduction, harmonising terms after a merger, removing legacy benefits, or imposing different working patterns. P&O Ferries' 2022 mass-dismissal of 800 seafarers without consultation crystallised public concern.

The dismissal must have a "potentially fair" reason — typically "some other substantial reason" (SOSR) — and the employer must follow a fair procedure. Without these, the dismissal is unfair and the employee can claim unfair dismissal at the Tribunal. The new Code makes the procedural requirements significantly more demanding.

The Code says employers must:

• Treat dismissal as a last resort — explore meaningful alternatives, including phasing changes, voluntary buyouts, or alternative restructuring.
• Share information transparently — give affected employees and their representatives enough information to understand the proposal and its rationale, and time to respond.
• Consult genuinely — meaningful two-way dialogue, with the employer open to changing the proposal based on responses. This is not a "tell and ask" exercise.
• Re-examine the proposal in light of responses — record what the employer considered and why specific alternatives were rejected.
• Allow appropriate time — not impose artificial deadlines. The Code emphasises that consultation must be in good time and at a meaningful stage.
• Not use dismissal-and-re-engagement as a tactic to drive change — using the threat of dismissal as negotiating leverage is specifically criticised.

The Code does NOT prevent fire-and-rehire where it is genuinely necessary and procedurally fair. But it sets a much higher procedural bar than under the pre-2024 case law.

Under section 207A TULRCA 1992, where a Tribunal finds that an employer has unreasonably failed to comply with a statutory Code of Practice, it can increase the compensation awarded by up to 25%. This applies to dismissal-and-re-engagement cases from 18 July 2024.

The uplift applies to most heads of compensation in: unfair dismissal claims, discrimination claims (Equality Act), breach of contract claims, and other employment-related claims where the underlying conduct involved unreasonable non-compliance with the Code.

For a senior employee earning £80,000 and successful in an unfair dismissal claim with a £30,000 basic compensation award, a 25% uplift adds £7,500. For a discrimination case with a £60,000 injury-to-feelings and lost-earnings award, the uplift could add £15,000. The risk is substantial.

If your employer raises fire-and-rehire:

1. Request the full proposal in writing — including the proposed new terms, the timeline, and the business case.
2. Engage your union representative or staff forum — collective representation strengthens your position.
3. Ask for genuine consultation — propose alternatives (phased implementation, voluntary opt-in for new starters only, retention bonuses).
4. Document the process — every meeting, every response, every alternative the employer rejected. The Tribunal will scrutinise the paper trail.
5. If 20+ employees are affected, the employer must follow collective consultation under section 188 TULRCA — 30 days for 20-99 employees, 45 days for 100+. Failure means a "protective award" of up to 90 days' gross pay per affected employee.
6. Consider signing the new contract "under protest" — accepting under duress preserves your right to claim later. Get legal advice before signing anything.
7. If you are dismissed, claim unfair dismissal at the Tribunal within 3 months less one day, after ACAS Early Conciliation.

The Employment Rights Bill, introduced in October 2024, contains additional planned reforms for fire-and-rehire:

• A new automatic unfair dismissal protection where the principal reason for dismissal is the employee's refusal to accept varied terms, unless the employer can show genuine financial difficulty.
• Stricter consultation requirements written directly into statute.
• Possible criminal sanctions for the most egregious cases (still under consultation).

As at May 2026 the Bill is progressing through Parliament. Until enacted, the 2024 Statutory Code and the Tribunal uplift regime apply. Employers planning major restructuring should assume that the bar will continue to rise.