The Government has confirmed that stronger protections aimed at tackling controversial dismissal and re-engagement practices will now be delayed until next year. The proposed Fire and Rehire Employment Rights Bill update is designed to prevent employers from dismissing employees and rehiring them on less favourable terms without meaningful consultation and clear business justification.
While fire and rehire is often described as a last resort, it has attracted significant criticism and reputational risk. In this blog, we outline what the delay means for employers, how this could reshape the rules around contractual change, and the steps organisations should consider now to remain compliant and reduce risk.
Fire and Rehire Employment Rights Bill Restrictions
As part of the proposed updates, employers will no longer be able to dismiss employees and then re-engage them on less favourable terms and conditions as a means of forcing contractual change. In most circumstances, this approach will be treated as automatically unfair dismissal. Significantly increasing the legal risk for organisations that attempt to use it.
The Government has introduced these measures to promote greater fairness and transparency in workplace relations, ensuring that contractual changes are made through meaningful consultation and genuine agreement rather than pressure. The aim is to balance the need for businesses to adapt with stronger protections for employees against unreasonable practices.
New Deadline set
While the Fire and Rehire Employment Rights Bill has passed in parliament, the changes will not be part of legislation until early 2027. The implementation date will move from October 2026 to January 2027.
The balance between flexibility and fairness is shifting. In future, organisations are likely to be judged not just on their intentions, but on how they behave in practice.
There is now far less tolerance for employers imposing changes to key contractual terms without agreement. Fire and rehire has long been viewed as a last-resort option when negotiations stalled, but that option is being deliberately restricted. The real question is not whether flexibility will disappear, but how employers can achieve necessary change through consultation, planning and trust in an increasingly fast-moving business environment.
Is it illegal to fire and rehire?
Fire and rehire is not considered unlawful under current UK legislation. However, that doesn’t mean it doesn’t come with risks. Employers are unable to dismiss an employee just because they couldn’t come to an agreement on changes to an employment contract. They still have to provide a fair reason for the dismissal.
In most cases, employers site ‘Some Other Significant reason’ for the reason to dismiss and rehire. In the event of a tribunal, the employer will still have to prove the acted reasonably and fairly.
Fire & Rehire Code of Practice
Dismissing and re-engaging employees to change their terms and conditions can create significant tension between employers, employees and trade unions.
The statutory Code sets out clear expectations for employers. Furthermore, it makes it clear that dismissal and re-engagement should only be used as a genuine last resort. Where an employer unreasonably fails to follow the Code, an employment tribunal can increase compensation by up to 25 per cent.
Preparing for Fire and Rehire Changes
Fire and Rehire Employment Rights Bill reforms are not expected to take effect until January next year. However, now is the time to prepare. The direction of travel is clear. Therefore, employers who take proactive steps will be in a far stronger position when the changes come into force.
Start by reviewing your existing contracts of employment and any flexibility clauses to ensure they remain clear, lawful and fit for purpose.
- Consider whether your variation clauses are robust
- whether your consultation processes are well documented
- managers understand the risks associated with dismissal and re-engagement
It is also sensible to review related policies, such as change management and collective consultation procedures, to ensure they reflect current best practice.
Taking action now will not only reduce legal risk but also help protect employee relations and your organisation’s reputation should contractual changes become necessary in the future.
How The HR Booth Can Help
At The HR Booth, we understand how complex and sensitive contractual changes can be. Particularly with developments such as the Fire and Rehire Employment Rights Bill and updates to the statutory Code. Our experts keep our clients informed of the latest legislative changes. We also ensure you understand not just what is changing, but what it means in practical terms for your organisation.
- We can review and update your contracts
- policies and procedures to reflect current best practice
- guide you through meaningful consultation processes
- provide hands-on support to reduce legal and reputational risk
Whether you need advice on a specific situation or a full policy refresh, our team is here to help. We ensure you stay compliant and are confident in your approach.
