Posts Tagged ‘employment contracts’

Code of Practice on fire and re-hire now in force.

Posted on: July 22nd, 2024 by Hugh Dineen-Lees

This article was updated on 2 August 2024 to take account of the changes to the statutory Code of Practice on fire and re-hire as re-issued by the Government on 30 July 2024. 

On 18 July 2024, the Secretary of State issued the Statutory Code of Practice on Dismissal and Re-engagement under Section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992. This is more commonly referred to as the Code of Practice on ‘fire and re-hire’.

The code provides practical guidance on how to promote the improvement of industrial relations. The Secretary of State considered that the practice of dismissing and re-hiring employees as a means to change their terms and conditions of employment could give rise to conflict between employers, employees and Trade Unions, which could subsequently lead to a deterioration in employment and industrial relations.

The code will provide guidance to employers, employees and their representatives where an employer is considering making changes to one or more of its employees’ contracts of employment and envisages that if the employee does not agree to some or all of the changes, the employer may opt for dismissal and re-engagement in respect of that employee. Some of the key provisions include;

  • Employers need to explore alternatives to ‘fire and rehire’ and it should only be used as a last resort.
  • Employers should not threaten dismissal if it is not actually envisaged and must not coerce employees into signing new terms and conditions.
  • The employer should ensure that the only terms which are changed are those which have been subject to the information-sharing and consultation process and should not use this as an opportunity to make any further changes.
  • A requirement to consult ‘for as long as reasonably possible’, but — unlike collective redundancy consultation — there is no minimum time period. Employers are told to contact Acas at an early stage before they raise ‘fire and rehire’ with the workforce.
  • Once the employer becomes aware the proposed changes are not agreed, they should re-examine them. The employer should consider feedback from employees and/or their representatives.
  • The employer might commit to reviewing the changes at a future set time and reconsider whether they are still needed. If more than one change is being implemented, the employer might also consider introducing them on a phased basis.

Whilst there is no stand alone claim for a breach of the code and its provisions, the Tribunals must take this into account in all relevant cases, including claims for unfair dismissal. The Tribunals will have the ability to uplift compensation by up to 25% if an employer unreasonably fails to follow it or reduce any award by up to 25% if the employee has unreasonably failed to comply. However, the uplift will not apply to protective awards for failure to inform and consult in consultation redundancy situations.

It is also worth noting that the Labour party have pledged to legislate to end ‘fire and re-hire’ and to replace and strengthen the code. Therefore, if you are facing any issues in relation to the above, speak to our specialist employment team where we can provide up-to-date information and advise you on how to manage any potential conflicts which may arise.

Changes to the obligation to inform and consult on TUPE transfers

Posted on: July 1st, 2024 by Natasha Cox

Changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) come into effect on 1 July 2024.

These changes are likely to be welcomed by small to medium-sized businesses as they provide greater flexibility to employers in complying with their duty to inform and consult affected employees in relation to a TUPE transfer.

A business preparing for the sale of part or all of an undertaking or service provision can now consult directly with affected employees if:
– there are no recognised trade union or employee representatives AND
– the employer has not already invited the affected employees to elect representatives AND
– either the employer has fewer than 50 employees OR
– fewer than 10 employees will transfer.

There is nothing to prevent an employer in either scenario from arranging an election to vote for employee representatives if this is preferred.

Please get in touch if you require any advice as to how to get the process right for your business. A failure to do so can be costly: transferors and transferees are jointly liable for any breach of the duty to inform and consult. This could result in protective awards reaching as high as 13 weeks’ gross pay for each affected employee.

Government consultation response: non-compete clauses to be limited to three months

Posted on: October 25th, 2023 by Natasha Cox

The government has announced plans to limit the length of non-compete clauses in employment contracts in its response to a 2020 consultation on their reform.

Non-compete clauses are one of several types of post-termination restrictions that are often found in employment contracts. These restrictions typically restrict an employee’s ability to work for a competitor for a set period following the termination of their employment, but can also restrict their ability to canvass or solicit clients and customers, as well as poaching colleagues.

To be enforceable, restrictions must not be any wider than reasonably necessary to protect legitimate business interests. Examples of legitimate business interests include client, supplier or customers relationships, and confidential information.

Non-compete clauses are the most restrictive option, with employees frequently seeking to argue they prevent them from securing alternative employment during the restricted period. 

In 2020, the Government published a consultation paper exploring options for reform, including mandating that non-compete clauses be unenforceable unless the employer provides compensation for the period of restraint, or making all non-compete clauses unenforceable.

The government has now rejected the possibility of making employers pay employees during a restricted period, citing concerns around substantial costs and supressing growth. Instead, it has proposed to limit the period of non-compete restrictions to just three months.

While these are just proposals, and properly drafted non-compete clauses lasting longer than three months continue to remain effective at present, employers need to carefully consider the impact on their business if the option to have a longer non-compete period is removed. It is worth considering what other protections can be put in place to achieve as near as possible the same level of protection currently afforded by a non-compete restriction.

Contact us for advice on post-termination restrictions and updating your contracts of employment.