Dismissal and Re-engagement – Uplift to Compensation.

The Code of Practice on Dismissal and Re-engagement (or “fire and rehire”) came into force in July this year – see Gemma Workman’s blog here.

A notable omission from the list of claims to which uplifts to compensation could be applied in the event of non-compliance with the Code of Practice was protective awards.

Protective awards of up to 90 days’ gross pay can be made by employment tribunals to each affected employee where an employer has failed to comply with the collective consultation obligations that apply when 20 or more employees are proposed to be dismissed at any establishment within a 90 day period by reason of “redundancy”. In this context, the term “redundancy” includes a dismissal resulting from an employee refusing to accept a change in terms and conditions of employment (as well as a dismissal resulting from an employer having a reduced need for employees or closing down).

A new Order has rectified the situation by adding failure to follow the above collective consultation requirements to the list of claims where an adjustment to compensation of up to 25% can be made for failure to follow the Code of Practice. The Order comes into force on 20 January 2025.

As a result, from 20 January 2025, when assessing the financial risk associated with a failure to comply with collective consultation obligations in connection with dismissal and re-engagement, employers should factor in the potential for a 25% uplift to any awards if they also fail to act in accordance with the Code of Practice