A crackdown so-called fire and rehire tactics by employers has been criticised as “tinkering around the edges” by the leader of the Trades Union Congress (TUC).

Its general secretary spoke up as the Department for Business and Trade (DBT) confirmed the creation of a new statutory code covering the practice, also known as dismiss and reengage.

Fire and rehire refers to when an employer fires a member of staff and offers them a new contract on new, often less favourable terms.

It said the code, subject to parliamentary approval, would prevent rogue use of the tactic by employers as employment tribunals would have the power to apply an uplift of up to 25% of a person’s compensation through any unreasonable lack of compliance.

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The DBT said employers must explore alternatives to dismissal and re-engagement and have meaningful discussions with employees or trade unions to reach an agreed outcome.

“The Code makes it clear to employers that they must not use threats of dismissal to pressurise employees into accepting new terms”, the statement added.

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“They should also not raise the prospect of dismissal unreasonably early or threaten dismissal where it is not envisaged.”

The draft was put out to consultation last summer and unions maintained their grievances when the code of practice was confirmed on Monday.

They have hit out at several major employers since the pandemic, including British Gas and British Airways, with the TUC suggesting in 2021 that nearly one in 10 workers had been asked to reapply for their jobs since the start of lockdown in March 2020.

However, they were particularly angry in the wake of the P&O Ferries scandal of 2022.

In March of that year, almost 800 workers were sacked at the DP World-owned company and replaced with agency staff.

Mr Hollinrake confirmed in his interview that the Insolvency Service was continuing to examine whether civil law was broken in that high profile case.

He described the mass sackings as “disgraceful” but added: “That was a fire situation, that wasn’t a fire and rehire situation.”

“Since that, we have legislated to say that anyone working in British territorial waters must earn the National Living Wage to reduce the benefit to something like P&O might get from taking those kind of actions.

“Also, of course, workers can take their cases to employment tribunals and make sure they get significant redress for that kind of action.”

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He explained that the code had to strike a balance between preventing abuse of employees and preventing job losses, saying that so-called fire and rehire should be a last resort.

“Better than hundreds of people potentially being made redundant… is to look at ways to restructure a workforce if a company hits very difficult economic times”, he concluded.

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General secretary of the TUC union organisation, Paul Nowak, said the crackdown was half-baked and failed to protect workers’ rights to the extent Labour was promising.

“This code lacks bite and is not going to deter bad employers like P&O from treating staff like disposable labour”, he responded.

“We need far more robust legislation to protect people at work.

“One in 10 were threatened with fire and rehire during the pandemic – tinkering around the edges is not going to cut it.”

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