New for 2025 - Employment Tribunal Powers to Increase Awards
Published byLiam A Entwistle
The statutory Code of Practice on Dismissal and Re-engagement (the 'Code') has been in effect since 18 July 2024.
It allows tribunals to modify compensation by up to 25% if one party unreasonably fails to follow it. However, the legislation needed to allow this uplift to be made is only set to come into effect now.
The Code
When an employer offers new contractual terms after a dismissal (”fire and re-hire”) the Code provides that employers should:- (i) explore alternatives to dismissal; (ii) not use dismissal as a negotiation tactic; and (iii) only dismiss as a last resort. Starting 20 January 2025, if employers fail to reasonably do this, tribunals can adjust compensation by up to 25% in unfair dismissal claims. .
”Fire and re-hire” procedures can also trigger collective consultation obligations under TULR(C)A 1992. If an employer fails to meet these obligations, tribunals can order a protective award of up to 90 days' pay, which can increase by 25% from 20 January 2025 if the Code is not followed.
The tribunal can reduce compensation if the employee unreasonably fails to follow the Code.
The impending Employment Rights Bill will make it harder for employers to change terms without agreement. If the Bill stays as it is employees who refuse such changes will be able to claim automatic unfair dismissal unless the employer can prove financial necessity and lack of alternatives. This will make fire-and-rehire practices extremely risky for employers.
For expert employment law advice contact the WJM team at employment@wjm.co.uk
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