An employer wants to change contractual shifts to cover longer opening hours, but some employees disagree. Can it end their contracts and offer them their jobs back on the new terms? This practice, known as fire and rehire, already carries legal risks. New protections scheduled for March 2027 will substantially restrict when employers can use it.
The Employment Rights Act 2025 will not ban fire and rehire in every situation. Whether a dismissal is automatically unfair will depend on the contractual change involved, the reason for dismissal and whether a statutory exception applies.
This guide explains the changes for employers in Great Britain: England, Scotland and Wales. Northern Ireland has a separate employment law framework.
Fire and rehire means dismissing an employee and offering to employ them again on different contractual terms. Its formal name is dismissal and re-engagement.
For example, an employer might propose removing a contractual allowance. If agreement cannot be reached, it might consider terminating the existing contract and offering a new one without that allowance. The employee is still dismissed even if they accept the new contract.
“Fire and replace” involves dismissing employees and bringing in other people to perform their work. The new law addresses both replacement employees on changed terms and certain arrangements involving non-employees, such as agency workers.
Under current Acas guidance, dismissal and re-engagement should be a last resort after thorough consultation and reasonable attempts to agree changes. Employers must consider whether the reason for dismissal and the process followed are fair and give the correct notice.
The government’s statutory Code of Practice on Dismissal and Re-engagement also applies where employers envisage dismissal and re-engagement if changes are rejected. It can apply even where only one employee is affected. Employers should contact Acas before raising that prospect with employees.
The government’s timetable, updated on 22 October 2026, schedules the new protections for March 2027, replacing the previous January date. They are not yet in force.
Under section 28 of the Employment Rights Act 2025, certain contract changes are classed as “restricted variations”. Dismissing an employee because they refuse one of these changes will generally be automatically unfair, subject to statutory exceptions. This protection also covers dismissing an employee so that they, or someone else, can perform substantially the same duties under a contract that includes a restricted variation.
For changes outside this category, tribunals will assess dismissal fairness under ordinary unfair dismissal rules, with additional factors to consider. These include the consultation carried out and anything offered to the employee in return for agreeing to the change. A change outside the restricted list will not make dismissal automatically fair.
The new law will generally make it automatically unfair to dismiss employees and replace them with agency workers or other non-employees doing substantially the same work. This specific protection will not apply if the main reason for dismissal is that the employer needs less of that work, or no longer needs it. A narrow financial exception may also apply. Neither exception automatically makes the dismissal fair.
The statutory definition covers:
- Reducing or removing sums payable in connection with employment, subject to regulatory exclusions.
- Changing a measure of work or results used to calculate pay.
- Changing pension terms.
- Changing the number of hours an employee must work.
- Reducing entitlement to time off.
- Specified changes to shift timing or duration, and any further categories set by regulations.
- Adding a contractual power to make a restricted variation without the employee’s agreement.
Not every benefit or shift change automatically falls within this definition. In its October 2026 consultation response, the government announced plans to cover shifts moving between day and night, or weekdays and weekends, in either direction.
Under the government’s plans, reducing or removing most expense payments or non-cash benefits would not count as a restricted variation. However, cuts to travel expenses, accommodation expenses and long-term accommodation provided as a benefit would remain within the restricted category. These decisions still require regulations; they are not rules already in force.
There is a narrow financial exception to the automatic unfair dismissal protection for restricted variations. For a private business, the change must address financial difficulties that threaten its ability to continue operating at the time of dismissal or in the immediate future. The employer must also show that it could not reasonably have avoided making the restricted change.
A wish to improve margins or standardise contracts is not, by itself, enough. Different statutory tests address public sector employers and local authorities.
Even where an exception applies, a tribunal must still assess dismissal fairness. Employers should obtain advice on their specific circumstances before relying on an exception.
Yes. Employers can still seek agreement to change terms. The new protections concern specified dismissals connected with contract changes; they do not prevent genuine negotiation.
An existing flexibility clause may permit certain changes without fresh agreement. The clause must cover the proposed change and be used reasonably. Employers should consult, give reasonable notice and consider discrimination risks. A broad clause does not authorise any change the employer chooses, nor does it remove unfair dismissal risks if dismissal follows.
Meaningful consultation means explaining proposals, listening to concerns and considering alternatives before decisions are finalised. Consult all affected employees, including those who are absent, and involve recognised trade unions or other employee representatives as appropriate.
For example, when proposing changes to working hours, employers could seek volunteers for the proposed working pattern, phased changes or alternative staffing arrangements. Record why suggestions are accepted or rejected. Reaching agreement through consultation can avoid the need to consider dismissal.
Review proposed changes early enough to consider alternatives. Focus on the contractual terms affected and how decisions will be made.
Start by identifying where the relevant contractual terms are recorded. The Act’s explanatory notes explain that these can include provisions in staff handbooks and collective agreements that form part of the employment contract. Compare the existing and proposed terms, then flag potential restricted variations for HR or legal review.
Document the business reasons for the proposed changes, the supporting evidence and the alternatives considered. Require HR or legal review before managers raise the possibility of dismissal or commit to changes. Ask managers to record employee concerns and escalate unresolved issues.
If dismissal and re-engagement is being considered, check whether collective consultation duties also apply. Currently, proposing to dismiss and re-engage 20 or more employees at one establishment within 90 days or less triggers collective consultation with the appropriate representatives. Agreeing contract changes with 20 employees, without proposed dismissals, does not itself trigger that rule.
Consultation must begin at least 30 days before the first dismissal for 20–99 proposed dismissals, or 45 days for 100 or more. Other consultation duties and the Code may apply below these thresholds.
Before implementing any proposal, check the final commencement rules, transitional arrangements and regulations. An exercise that spans the change in law needs particular review.
Use this checklist when reviewing a proposed change:
- Review planned contract changes and identify affected employees.
- Check whether any proposed change could be a restricted variation.
- Document the business reason, evidence and alternatives considered.
- Plan genuine consultation before decisions are finalised.
- Ask HR or legal advisers to review proposed dismissal or re-engagement.
- Brief line managers on escalation and recording discussions.
There is no blanket prohibition under current law in Great Britain, but a dismissal can be unfair or breach other obligations. The 2027 protections will make specified dismissals automatically unfair, subject to exceptions. Northern Ireland requires separate consideration.
They are scheduled for March 2027 under the government’s latest timetable. Check the commencement regulations before acting; the protections are not yet in force.
It is a defined type of change that triggers the new dismissal protections. Examples include pay reductions and changes to required working hours. Some categories depend on regulations.
Sometimes an existing contractual clause permits a reasonable change. Its scope and use matter. Otherwise, employers should seek agreement and should not assume they can impose new terms simply because consultation has ended.
Fire and rehire aims to continue employment on changed terms. Redundancy generally concerns a business or workplace closure, or a reduced need for employees to do particular work. The actual circumstances matter more than the label used.
Preparing for the new rules means reviewing proposed contract changes, considering alternatives and planning meaningful consultation. Managers need to understand their role in these discussions and when to involve HR before taking action.
Human Focus’s Employment Rights Act Awareness Training for Managers explains how the reforms affect everyday employment decisions. It covers changes to terms and conditions, unfair dismissal risks and the importance of keeping factual records and seeking support early.
The course supports manager awareness alongside your organisation’s procedures and specialist legal advice.
