Consultation: Draft code of practice on dismissal and re-engagement


As we reported in our January 2023 Advisory Bulletin the Department for Business, Energy and Industrial Strategy (BEIS) is consulting on a draft Code of Practice on Dismissal and Re-engagement, and we set out below further details of that Code, as well as the consultation and process.

LGA response and how to take part

The LGA will be responding to the consultation on behalf of local authorities and to assist with that we would welcome authorities’ responses to the consultation questions set out below, alongside our comments. Those comments should be sent to by 4 April 2023. Should authorities want to respond directly to the consultation they can do so using the Government’s online response form, or they can email The deadline for responses to the Government is 18 April 2023 and we would be grateful if a copy of any such response could also be sent to us, again at


As a consequence of the significant media attention in 2020 given to certain ‘fire and re-hire’ exercises, the Government asked Acas to conduct a fact-finding exercise to understand how dismissal and re-engagement was being used. That review showed that dismissal and re-engagement processes applied across a range of sectors and was used in a range of circumstances to implement changes to contracts. The review also resulted in Acas publishing guidance on making changes to employment contracts and the Government is now going further and proposes to issue a statutory code of practice under section 203 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A).


In summary, the draft Code sets out employers’ responsibilities when seeking to change employment terms and conditions, if there is the prospect of dismissal and re-engagement. It requires employers to consult staff and explore alternative options, without using the threat of dismissal to pressure employees to agree new terms.


Purpose and scope and the Code

The purpose of the Code is to ensure that, where dismissal and re-engagement is being considered to implement contractual changes, employers take all reasonable steps to explore alternatives to dismissal.  It is also aimed at ensuring employers engage in good faith in meaningful consultation with trade union and other employee representatives, and that undue pressure is not put on employees to accept new terms and conditions. 

The Code applies where an employer:

  • wants to change employees’ contracts; and
  • anticipates that if the employees do not agree to the changes, then it might dismiss and then either re-engage them on the new terms or engage new employees on those terms to carry out the work.

The Code applies regardless of the number of the employees affected and the employer’s objectives. It does not apply though to dismissals for redundancy as defined in section 139(1) of the Employment Rights Act 1996.

Question 1 - The right circumstances in which the Code should apply

Do you think these are the right circumstances in which the Code should apply?

LGA comments: we anticipate that many local authorities will agree that the circumstances when the Code should apply are the appropriate ones and so we will respond accordingly unless authorities tell us otherwise. It is also worth noting as well when considering this question that presumably the specific exclusion from the Code of s.139(1) redundancy dismissals is to avoid any question of whether they should be covered under the Code. This is because dismissal and re-engagement processes are covered by the collective redundancy consultation obligations in TULR(C)A where 20 or more dismissals are proposed, due to the definition of redundancy for the purposes of those duties extending beyond the s.139(1) definition. Therefore that might lead some to assume the Code should apply in the same way to s.139(1) dismissals. That would not appear to be appropriate as genuine s.139(1) dismissals do not involve the re-engagement or replacement of the employees concerned, which is what the Code is designed to cover.

Legal status of the Code

The Code itself imposes no legal obligations. However a court or employment tribunal will be able to take the Code into account when considering relevant cases, including unfair dismissal. Employment tribunals will then have the power to increase an employee’s compensation by up to 25% if an employer has unreasonably failed to comply with the Code. The tribunal could also reduce any award by up to 25%, where it is the employee who has unreasonably failed to comply.

Reconsidering the need for change

The Code recognises the importance of meaningful consultation with trade unions and employee representatives and also that when changing terms and conditions employers must take into account all their legal obligations. In that respect, as well as other obligations, reference is made to the need to be mindful of adhering to collective bargaining arrangements where there is a recognised trade union, and the existing terms and conditions are collectively agreed. This is because a failure to do so could result in claims under s.145(B) of TULR(C)A (see Kostal UK Ltd v Dunkley and others [2021] UKSC 47).

LGA comments: there is no particular question covering this part of the consultation but in any event, we anticipate that authorities will agree with the principles and issues set out at this part of the Code, those aligning anyway with their existing employee relations and other practices.
If employees are not prepared to accept the employer’s proposed contractual changes but the employer still wants to make those changes, if necessary, through dismissal and re-engagement, then the Code provides that the first step is for the employer to re-examine its business strategy and plans.

The Code recognises that there are a range of reasons an employer may have for wanting to change terms and conditions, including:

  • economic, financial or business ones
  • organisational reasons such as a need to change working practices; and
  • human resources ones such as the need to harmonise terms and conditions or to expand the ability to offer flexible working.

The Code then provides that the employer should, taking into account any feedback it has received from its employees and their representatives, carefully consider its analysis of why the employer thinks the changes are needed. In respect of this the factors the employer should consider may include:

  • the objectives it is seeking to achieve
  • the negative consequences of acting unilaterally, including on reputation, industrial relations, employee retention and the risk of legal claims (see below)
  • whether its plans carry any discriminatory impacts in terms of having a disproportionate impact on those who share a particular protected characteristic; and
  • whether there are alternative ways of achieving the same objectives, for example through the use of mobility clauses. 

Finally this section of the Code provides that the employer should continue to reassess its proposals as discussions and consultations progress. 

Question 2 - Business strategy and plans, taking account of the feedback received and suggested factors

Do you agree that, as the Code requires, it is a necessary step for the employer to re-examine its business strategy and plans, taking account of the feedback received and suggested factors (in the bullet points above)?

LGA comments: we anticipate that most local authorities will already be routinely carrying out  and recording the type of re-examination and consideration of its plans as outlined by the Code. The underlying reason for that will be to limit or remove any negative impacts where possible. Authorities will also be mindful of the need to be able to justify its plans in any legal proceedings and for wider reputational and employee relations purposes should it still need to pursue dismissal and re-engagement. Further, authorities will already be alert to the need to consider equalities issues and to avoid discriminatory outcomes.

Accordingly we consider that local authorities will agree with the question above and we will respond accordingly unless they tell us otherwise. 

Question 3 - Comments on the list of factors which an employer should consider in paragraph 22

Do you have any comments on the list of factors which an employer should consider in paragraph 22 in the Code?

LGA comments: those factors are summarised in the bullet points above and in our view, they are all relevant factors to consider. We would welcome authorities’ views though.

Providing information for employees

The Code provides that in order to try to reach an agreed resolution, the employer should consider what further information it could share with employees and their representatives to help achieve that resolution.

To do that, the employer should consider what further information could be provided about:

  • the nature of the proposals
  • who will be affected by the proposals
  • why there is a need for the proposed changes
  • the timeframe for the proposed changes; and 
  • any other options that have been considered (together with the bullet points below ‘the information’).

The information should generally be shared as early in the process as is possible, and aside from the Code employers should ensure they comply with any other legal and other requirements they may have to share information, such as under collective bargaining agreements and/or under collective redundancy consultation obligations under TULR(C)A. 

The information should be provided to trade unions (presumably by providing it to the trade union representatives), other employee representatives, and/or individual employees. It is also important that all employees who might be affected by the proposals are consulted with either directly or through their representatives. The parties should also be mindful of any employees who may be absent on sick leave or for family leave purposes. Finally in this part, the Code provides that the parties should consider the appropriate style and type of communication to ensure certain groups aren’t exclude, for example employees for whom English is not their first language or neurodiverse employees. 

The information that can be shared will depend on the individual circumstances, however, generally the more that can be shared the more likely it is that agreement might be reached. In most circumstances though the appropriate information to be shared will include:

•    the business reasons and rationale for the proposed change
•    the anticipated timings for the changes and the reasons for those
•    the benefits of any changes; and 
•    the impact on the employer if the changes do no take place (together with the bullet points above ‘the information’).

The Code indicates that it is likely that the employees and their representatives will have questions following the provision of the information, and notes that the more detailed the employer’s responses the more likely it will be that matters can be resolved amicably. It recognises though that there will be cases where information cannot be shared, for example where it is confidential, and if so, it would be good practice for the employer to explain the reason for any refusal for providing information as fully as possible. 


The Code emphasises that consulting in the right way with employees and/or their representatives is of critical importance. 

In order that it is meaningful it is important that the employees and their representatives understand the employer’s objectives and the nature of the proposals. Employers should also be honest and transparent about their intention to dismiss and reengage should agreement not be reached on the proposed changes. However, a threat of dismissal should never be used as a negotiating tactic where the employer is not in fact contemplating using dismissal and reengagement. 

Both parties should listen to one another and respond openly and in good faith. 

In terms of the timing of the consultation, the Code indicates that that will depend on the circumstances. However, it notes that a longer consultation period is likely to mean there is a more thorough examination of all the issues and any alternative options. 

Finally, as with sharing information employers need to consider what other consultation obligations may apply, such as under a collective agreement. Employers should also be mindful to ensure that discussing new contractual terms directly with employees without engaging a recognised trade union does not amount to an unlawful inducement to bypass collective bargaining under s.145B of TULR(C)A. 

Question 4 - The sharing of information with employees

The Code requires employers to share as much information as possible with employees, suggests appropriate information to consider, and requires employers to answer any questions or explain the reasons for not doing so. Do you agree this is a necessary step?

LGA comments: we anticipate that local authorities will already be following a very similar process as is proposed by the Code when providing information and consulting with employees and their representatives. This will be because of other information and consultation obligations, such as under statute, but also because such a process is more likely to result in agreement on proposed changes and maintain good industrial relations. Therefore unless local authorities tell us otherwise, we will respond to this question to agree that the requirements in the Code are a necessary step.

Question 5 - Information suggested for employers to share with employees at paragraphs 25 and 33

Is the information suggested for employers to share with employees at paragraphs 25 and 33 of the Code the right material which is likely to be appropriate in most circumstances?

LGA comments: this is ‘the information’ referred to in the bullet two sets of points above. We anticipate that local authorities will consider it is the right material to be shared and so will respond accordingly unless authorities tell us otherwise. 

If changes are agreed

If the changes are agreed, the Code provides that the employer should put them in writing, setting out when they will commence. If the change is to any of the terms covered by the written particulars as set out in Part 1 of the Employment Rights Act 1996, the employer must under section 4 of that Act provide the employee with a written statement of the change within one month of the change taking effect.  

The Code also indicates at paragraph 46 the risks where an employee works under the new terms, seemingly but not expressly having accepted the new terms. That could still in some cases legally amount to a dismissal and re-engagement, with all the associated risk of claims. 

Finally, in this part of the Code, it indicates that it is good practice to maintain good communications with the affected employees as they adapt to the new terms.

Unilateral imposition of new terms

Where agreement cannot be reached, some employers might decide to try and impose those new terms anyway. That might be either because the existing contract contains a variation clause that the employer can rely on, or if not because the employer in any event wants to attempt unilateral variation anyway. 

This part of the Code sets out the risks of unilateral imposition, including the limits on the ability to rely on a variation clause. Further it sets out the risks of claims where no such clause exists, and the likely adverse impact on industrial relations. It does though indicate that where unilateral imposition is relied on the change should still be confirmed in writing, as it should be for an agreed change, and that the employer should still continue to discuss the change with the employees and their representatives.

Dismissal and reengagement

The Code provides that where, following a thorough information and consultation process, agreement is not reached and the employer wants still then to dismiss and re-engage, that before taking the decision to dismiss, the employer should take some time to reassess its analysis and consider carefully again:

  • if it is truly necessary to impose the new terms
  • if there are any alternative options; and
  • if the changes could have a greater impact on one group of employees who share a protected characteristic, compared to others (together ‘the suggested factors’ referred to in question 6 below). 

If though the dismissal still then goes ahead, the employer should give as much notice of the dismissal as possible, providing the contractual notice period as a minimum. The employer should also consider whether some employers might require a longer notice period, for example to allow enough time to change childcare arrangements. Further where a number of changes are considered , the employer should consider a phased introduction of the changes. It might also be possible to agree to review the changes after a certain period.

In any event though the Code confirms that new terms should be set out clearly in writing, in the same way as when they are agreed (see above), and employers should consider what practical support it might be able to offer, such as relocation assistance, career coaching or counselling for emotional support.

Further the Code also provides that it is good practice:

  • that the employees should be re-engaged as soon as possible in order to preserve continuity of employment
  • for the employer to continue to keep the requirement for the changes under review; and
  • to continue to monitor the impact of the proposed changes, to see if it is able to ameliorate and negative impacts. 

Finally, the Code concludes that the employee and the employee representatives should continue to engage in discussions which remain open to the possibility of reaching agreement on the new terms.

Question 6 - List of factors employers should take into consideration before making a decision to dismiss

Before making a decision to dismiss, the Code requires the employer to reassess its analysis and carefully consider suggested factors. Do you agree with the list of factors employers should take into consideration before making a decision to dismiss?

LGA comments: we anticipate that local authorities will agree with the list of suggested factors, those being ones that they will already be considering before taking a final decision to dismiss and re-engage. However, we would welcome comments on the suggested factors.

Question 7 - Phasing in changes, and providing practical support to employees

The Code requires employers to consider phasing in changes, and consider providing practical support to employees. Do you agree?

LGA comments: we anticipate that local authorities will agree, and so we will respond accordingly unless local authorities indicate otherwise. In responding though we will indicate that the Code should provide that in many cases the practical support the employer is able to provide will be limited due to cost considerations.

General questions

The consultation concludes with the following general questions.

Question 8 - Improvements in industrial relations when managing conflict and resolving disputes over changing contractual terms

Do you think the Code will promote improvements in industrial relations when managing conflict and resolving disputes over changing contractual terms?

LGA comments: local authorities will already be taking the majority of the steps that are required or suggested under the Code. Therefore the Code is likely to have a limited impact in local authorities in terms of promoting improvements in industrial relations. That being said, it will provide a useful reference for the parties when dismissal and re-engagement may be an option. We would welcome confirmation from local authorities on whether they agree.

Question 9 - Protecting employees who are subject to dismissal and re-engagement practices, whilst retaining business flexibility

Does the Code strike an appropriate balance between protecting employees who are subject to dismissal and re-engagement practices, whilst retaining business flexibility to change terms and conditions when this is a necessary last resort?

LGA comments: bearing in mind local authorities will already be taking the majority of the steps that are required or suggested under the Code, we anticipate that local authorities will agree the Code strikes an appropriate balance. Unless, therefore, local authorities tell us otherwise, we will respond accordingly.

Question 10 - Any other comments about the Code

Do you have any other comments about the Code?

LGA comments: we would welcome any comments local authorities may have. In particular we would be interested to hear whether they anticipate the Code will in effect require more thorough records to be kept in order to show compliance with the Code, or whether they consider the records they already keep in relation to changes to terms and conditions processes would already demonstrate compliance with the Code’s requirements.