Acas has responded to the government’s draft code of practice on dismissal and re-engagement. The draft code was published for consultation earlier this year alongside a consultation which closed last month, on 18 April. This is Acas's response to that consultation.
In summary, Acas says it broadly welcomes the government's central aim of ensuring employers take all reasonable steps to consult meaningfully and explore alternatives to dismissal and re-engagement. However, it suggests a number of areas where the government could be improved. There are three worth highlighting:
First the timing. Acas says the prospect of dismissal and re-engagement can sometimes be held out to employees at an ‘unnecessary and unreasonably early stage of discussions’ notwithstanding the employer’s need to comply with the notice requirements of section 188. Acas says paragraph 38 of the Code which requires that an employer be 'honest and transparent about the fact that it is prepared' to dismiss and re-engage appears to require that an employer should communicate that prospect even at the very earliest stages of consultation or negotiation when the employer may have it in mind only as a very distant potential outcome. They say that risks damaging industrial relations, and it’s a fair point.
Second the ‘post-fault’ penalty. Acas says the risk of a 25% uplift to any compensation awarded - which is what the draft code proposes - may not always be a sufficient deterrent for employers, especially large employers who can bear the cost. They’d like to see the government consider ‘additional or alternative financial disincentives’ and they suggest greater or uncapped awards for unfair dismissal where there are blatant breaches of the code.
Finally, they say even stiffening the penalties might not be enough in some cases. They say ‘The legal risks involved in a dismissal and re-engagement process can often be relatively easily managed by those employers with access to sound professional legal advice. This may well remain the case even if a Code introduces additional requirements.’ Acas wants the government to consider requiring the parties to consider engaging in Acas conciliation prior to dismissal and re-engagement to explore ‘the possibility of a mutually acceptable way forward that avoids that outcome.’ Given that a successful conciliation requires the voluntary engagement of both parties in the process, Acas says it would welcome discussions with the government as to how such a requirement might be made to work in practice.
So those are some of the issues with the code as it’s currently drafted. So, what do we think of the code as it stands? Earlier Ed Goodwyn joined me by phone from the London office to discuss it:
Ed Goodwyn: "I think is a bit of a damp squib. I think it may be a little bit generated by the political unrest that we heard about but I don't think it substantially changes the goalposts for an employer, other than the fact that it will allow employees who bring a claim to throw in an extra claim for a 25% uplift but fundamentally, what an employer used to do and has to do now in that space, the employer will still need to do. Most importantly, it does not outlaw the process of giving notice and looking to rehire to push through contract variations where you can't reach agreement".
Joe Glavina: "Do you think the code will help employers, Ed?"
Ed Goodwyn: "The code is useful. It draws out the issues that we're used to advising clients who are trying to do this in difficult circumstances, i.e., the client would want to properly collectively consult because normally we're talking about 20 more employees having their contracts changed so we are in what us employment lawyers call section 188 collective consultation country, and there's a whole load of obligations there and the code replicates that. Equally, if an employee isn't prepared to accept the new contract, and they get dismissed, the employer will likely face unfair dismissal risks and, again, the code reminds employers of the sorts of discussions it needs to have with its employees to avoid a successful claim for unfair dismissal. So, the substantive goalposts haven't changed in my view, it repeats what a properly advised employer would be doing anyway, but it just gives the little sting in the talk of a 25% uplift. But that's the legal position. What is clear is irrespective of what the law is, fire and rehire has always been high risk from an ER/IR perspective. In light of the press and the articles recently, it is even more a big PR issue. So, an employer has always been very cautious to go down that road and that, perhaps, is a little bit more concerning because of the fall out, and non-legal fallout, from it but that's always been the case. But the most important thing is the process is still able to be done and it's available for the employer if it is needed."
The consultation on the draft Code closed on 18 April and the government is now considering the responses they received, including that response from Acas. In due course they'll produce a final version of the Code in due course and as soon as they do, we will report on it, of course. Meanwhile we have put a link to the draft code in the transcript of this programme.
LINKS
- Link to Acas response to Draft Code of Practice on Dismissal and Re-engagement
- Link to Draft Code of Practice on Dismissal and Re-engagement
