What’s happening?
The Statutory Code of practice on Dismissal and Re-engagement (the Code) came into force on 18 July 2024. The Code sets out a process for an employer to follow where they are considering making changes to one or more of its employees’ contracts of employment and envisages that, if the changes cannot be agreed, they might opt to undertake a dismissal and re-engagement exercise.
Employment tribunals are required to take the Code into account when awarding compensation for the claims set out in Schedule A2 of the Trade Union and Labour Relations (Consolidation) Act 1992. This includes unfair dismissal. They have the power to impose an uplift or reduction in compensation of up to 25% for any unreasonable failure to comply with the Code’s provisions.
The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024 came into force on 20 January 2025. The Order amends Schedule A2, so that the ability to award an uplift or reduction of 25% also applies to any claims for a protective award brought by affected employees. Protective awards are made where an employer has failed to comply with its collective consultation obligations (which apply where 20 or more dismissals are being proposed at one establishment).
Why is this important?
This amendment strengthens the Code, offering greater protection to employees who have been dismissed without proper consultation. The amendment ensures that employees/employers can receive an uplift or decrease in their compensation, including the protective award. The intention is that this will encourage both parties to adhere to the Code.
What should you do?
Be aware: Compensation can be increased or reduced by 25% in a claim for a protective award. There is also a risk that the uplift could be applied retrospectively to claims brought between 18 July 2024 and 20 January 2025.
Employment Rights Bill: Employers should also prepare for the Employment Rights Bill. The Bill states that employers will be prevented from carrying out the fire and rehire process unless very limited circumstances apply. This Bill isn’t due to take effect until Autumn 2026.
Advice: If you require advice relating to this matter or the Employment Rights Bill, please contact [email protected] who will put you in touch with someone from our Employment Team.
