Employment Rights Bill: Key Changes for Employers in Fire and Rehire, Union Roles, and Collective Consultations

Fire and rehire

An employee will be regarded as having been automatically unfairly dismissed either if they are dismissed because the employer sought to vary the employee’s contract of employment, and the employee did not agree to the variation or to enable the employer to recruit another person (or rehire the employee) under new terms but with substantially the same duties. This means that businesses can no longer easily terminate employees contacts and rehire on new terms in correlation with supply chain demands. The aim of the provisions contained in the Employment Rights Bill are to  ensure that businesses have a stable, committed workforce which is essential for maintaining operational continuity within supply chains. However, this will mean that there are less options for businesses to consider when looking at their viability strategies.

There is an exception if an employer can show that the business is essentially in financial dire straits. The exception contained in the Employment Rights Bill confirms that fire and rehire dismissals will be automatically unfair unless the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business, and, in all the circumstances the employer could not reasonably have avoided the need to make the variation. If an employer can meet this test, then an employment tribunal will need to consider the fairness of any dismissal, and will take into consideration if any consultation has been undertaken and if anything has been offered to employees in return for agreeing to the variation.

The new Labour Government are currently consulting on certain provisions relating to this change, but what we do know for certain is that if as a business you may need to make changes to employees terms and conditions, and fire and rehire is a method which you have previously relied upon, we do not expect businesses to be able to fire and rehire unless there is an exception that can be relied upon.

Trade Unions and industrial action

The Labour party made a clear commitment to strengthen the rights of Trade Unions if they were elected. It therefore came as no surprise to see this commitment fulfilled in the Employment Rights Bill. For workplaces that have not had any experience of Trade Union involvement, this will add a different dimension to employment considerations. The changes are wide spread and include introducing obligations on employers to provide a worker with a written statement that they have a right to join a trade union, which must be given at the same time as the employer gives the worker their section 1 statement. There will also be an introduction of access agreements, which will be between a listed trade union and employer and will  provide for access to a workplace by one or more officials of the union for “any of the access purposes”. The access purposes are to meet, represent, recruit or organise workers (whether or not they are member of a trade union) and to facilitate collective bargaining. The access purposes do not include organising industrial action. Any disputes regarding access will be dealt with by the Central Arbitration Committee. The requirements  for trade union recognition will be made easier, and industrial action ballots will  be simplified, along with additional obligations on employers to provide time off for trade union officials and learning / equality representatives.

Whilst there are ongoing consultations on these changes to industrial relations, it is worthwhile preparing for more Trade Union involvement in workplaces going forward. If there are supply chain issues which may require changes to employment provisions, Trade Union involvement should be included a possibility within any strategy.  

Collective redundancy consultation

The “Woolworths” case considered whether the obligation to collectively consult on redundancies is triggered when 20 or more employees are dismissed across an entire business or at individual establishments. The European Court of Justice ruled that the requirement for collective consultation applies when an employer proposes 20 or more redundancies within 90 days at one establishment, not across the entire business. The Employment Rights Bill will now reverse this position, so that the collective redundancy threshold will apply across an entire business rather than at one establishment.  This means that business need to be more diligent in managing redundancies across their entire operation, as inadequate consultation can lead to higher turnover rates, loss of critical skills and disruptions in production, as well as consequences from an employment law perspective.  The aim of the Bill is to help organisations  to navigate workforce reductions more responsibly, however, this may mean that the trigger for collective consultation requirements is met more frequently, resulting in a change of timescales for supply chain operations, considering the more onerous obligations of collective consultation.

The Employment Rights Bill contains provisions which significantly impact supply chain dynamics. Whilst the Bill promotes fairer employment practices and robust employee protections, this means that businesses will need to ensure that correct procedures and practices are followed. This may result in additional time and resources being spent on employment law and HR matters, which shall need to be factored into timescales and budget considerations accordingly. Whilst the provisions contained in the Employment Rights Bill may alter as the Bill passes through Parliament, what we can be sure of is that change is afoot and preparations should be made now to ensure ongoing compliance.