The Employment Rights Bill on Unfair dismissal and Fire and rehire

As promised as part of their election manifesto, the Government has published details of its’ much-anticipated Employment Rights Bill. The Bill gives details of 28 proposed employment measures, but also makes clear that the Government will only start consulting on the proposed changes in 2025 and that the majority of changes will not come into effect until 2026, following a substantial transition period.

This post covers the proposed changes to Unfair dismissal and Fire and rehire.

Unfair dismissal

What is the law currently?

Currently other than in cases of automatic unfair dismissal, employees need at least two years’ service to bring a claim for unfair dismissal. In order to defend such a claim, employers need to be able to show they have a fair reason to dismiss an employee (e.g. misconduct, poor performance or redundancy) and that they have followed a fair process prior to dismissal.

What is changing?

The Government is proposing to make unfair dismissal a ‘day one right’. However they will introduce a ’statutory probationary period’ which they are proposing will be 9 months long. If an employee is ’not right for the job’ a fair process must still be followed during the probationary period, but this will be less onerous on employers. For a dismissal to be considered fair during a probationary period an employer will need to show it has held a meeting with the employee to explain the performance concerns and given them a chance to address these issues prior to dismissal. 

However after the probationary period in order for a dismissal to be considered fair, one of the fair legal reasons will need to apply and a longer process will need to have been followed. In a case of misconduct or poor performance this would need to be a first and then a final written warning, as per a disciplinary policy and in the case of redundancy this would need to be a fair consultation process. 

So how should employers prepare for these changes?

The key is to make the most of the probationary period. We recommend that this is at least 6 months long and reviews with the employee should be held at 2, 4 and 6 months with email summaries to follow up, detailing any concerns. Contractually you should have the option to extend the probationary period where necessary. Concerns about employees after probation should be addressed with a formal process as above.

Fire and rehire

What is the law currently?

There is currently a statutory code of practice on dismissal and re-engagement which states that dismissing an employee and offering to re-engage them on new terms should be a last resort, following a consultation with staff and exploration of all alternatives.

What is changing?

The Bill will make it automatically unfair to dismiss an employee if the main reason for this dismissal is:

a)         because the employee does not agree with the proposed changes to their contract; or

b)         to enable the employer to re-engage the employee to do the same work, but potentially on less favourable terms.

The only exception to this will be if the reason for the variation is to reduce financial difficulties for the employer which are affecting its ability to carry on the business. The employer must show that consultation has been carried out with staff and that there is ‘genuinely no alternative’ to varying the contract.

So how should employers prepare for these changes?

If there is a need to change employee terms and conditions, consultation should always be the first step, having considered whether a change of terms is really necessary. If it is you need to explain to staff the reasons for the proposed changes and give them a chance to consider their impact and feed back. Ideally staff should be offered an incentive to agreeing to the proposed changes, e.g. a salary increase or an increase in paid time off. If agreement to the proposed changes cannot be reached it may be that the employee has to remain on their current terms as fire and rehire will be automatically unfair unless the future of the business depends on it.

If you have any questions regarding the proposed changes or their impact on your business please contact us via help@yourhrpartner.co.uk.

Categorised in: Uncategorized

This post was written by SKHR