As of January 2025, Employment Tribunals now have enhanced powers to increase protective awards up to 25% in cases where the employers have failed to follow the collective consultation obligations and the Code of Practice on Dismissal and Re-engagement. Employers and HR practitioners should ensure they are aware of this important change.
The Code of Practice on Dismissal and Re-engagement came into force on the 18 July 2024. It allows the Employment Tribunal to order compensation be increased up to 25% where the employer has reasonably failed to follow the Code.
The Code must apply when an employer considers dismissing and re-engaging the employees on new terms and conditions. The Code requires the employer to look at reasonable alternatives to dismissal. The employer must now meaningfully engage with the employees and their representatives. Employers must not threaten staff looking to negotiate any proposed changed to their terms and conditions of employment. Dismissal and re-engagement should now be a last resort decision.
In the case of collective consultations for redundancy if an employer wishes to dismiss and re-engage an employee on new terms and conditions, this may prompt collective consultation requirements under the Trade Union and Labour Relations (Consolidation) Act 1992. This will apply to situations involving 20 or more employees.
In the situation where an employee’s current contract is ended and new contract offered, the employee can reject the new contract. They can leave and start a claim in the Employment Tribunal for unfair dismissal claim. If the employee succeeds in the claim the Employment Tribunal can increase the compensation by up to 25% where it is proven the employer has failed to follow the Code.
Where an organisation does not follow their collective consultation obligations the Employment Tribunal can order the employer to pay a protective award of up to 90 days' pay to each employee affected. The code will also allow the Employment Tribunal to also increase this by 25%. The Employment Tribunal will also be able to apply a reduction where an employee has failed to follow the Code.
The Employment Rights Bill will prevent employers changing the terms and conditions of their employees’ contract without the employee’s express agreement. A successful claim will result in an unfair dismissal claim. The employer will be able to defend their position by arguing that the change was essential due to financial difficulties in the business that affected its ability to run its business. The employer will need to prove there was no other choice.
Employers and HR practitioners should now seek legal advice before firing and rehiring staff. If you need any further advice and support, please do not hesitate to contact the Quest HR Advice Line Service for FREE on 01455 852 028.
