Fire And Rehire Employment Rights Bill
The rules on fire and rehire in the Employment Rights Bill were among the most closely watched parts of the legislation, and they changed considerably between the Bill’s introduction and its passage into law. Employers who formed a view of the reforms early on may be working from an outdated picture, because what was originally proposed and what will actually take effect are not the same. The Bill received Royal Assent on 18 December 2025 and became the Employment Rights Act 2025. The framework is now settled, although some of the detail still depends on regulations yet to be made, and the provisions are not yet in force.
Keeping clients updated on legal reforms as they move through Parliament, rather than leaving them to react once they land, is part of what we do at GAP HR. We have advised owner-managed businesses since 2003, and on a subject as high-risk as fire and rehire, knowing what is actually coming, as opposed to what the headlines suggested a year ago, makes a real difference to the decisions an employer takes now.
Call us now on 01491 598 600 or Click Here to Make An Enquiry and we will be delighted to help you.
What Did The Employment Rights Bill Originally Propose?
The first version of the Employment Rights Bill was sweeping. As introduced, it would have made it automatically unfair to dismiss an employee for refusing any variation to their contract, whatever the term involved, subject only to a narrow exception for businesses in extreme financial difficulty. In practice, this would have meant that no matter how minor or sensible the proposed change, and no matter how unreasonable an employee’s refusal, a subsequent dismissal would almost always have been automatically unfair.
That breadth drew substantial criticism from employers, who argued it would make even routine and necessary contractual housekeeping unworkable. The proposal was debated heavily as the Bill moved between the Commons and the Lords.
How Was The Proposal Narrowed?
The scope was reduced to a defined set of core terms. Rather than catching every variation, the automatic unfair dismissal protection was confined to what the legislation calls ‘restricted variations’, which cover fundamental matters such as pay, pensions, working hours, time off, and certain shift changes. Changes falling outside that list, for example, to place of work or duties, were moved into a separate and less severe regime.
This was a significant softening, and it came through Government amendments tabled in the House of Lords in July 2025 after sustained debate. The result is a more targeted measure that concentrates the strongest protection on the terms that matter most to employees’ livelihoods, while still tightening the position on other changes.
It is worth being specific about what the restricted category covers, because that is what determines how the strongest protection applies. The restricted variations are:
- Reductions to pay or to any sum payable in connection with the employment, including changes to the targets or measures that pay is linked to;
- Changes to pensions;
- Changes to working hours;
- Reductions in the amount of time off an employee is entitled to;
- Changes to the timing or duration of shifts, but only those specified in regulations.
Inserting a clause that would let the employer make any of those changes in future without agreement is also a restricted variation. The Government has consulted on excluding expenses and benefits in kind from the ‘sums payable’ category, and on limiting the shift changes caught to major moves, such as day to night or weekday to weekend working. Its response to that consultation, and the regulations that will follow, are still awaited.
Changes of that kind go to the core of the relationship between employer and employee, which is why they were singled out for the most stringent treatment, while more peripheral changes were left to the ordinary fairness regime.
What Does The Employment Rights Act 2025 Now Provide?
Under the Employment Rights Act 2025, dismissing an employee because they refuse a restricted variation, or in order to re-engage them or replace them with someone engaged on those varied terms to do substantially the same work, will be automatically unfair. No qualifying service is needed, so the protection applies from day one. The only escape is a narrow exception where the employer proves that the change was needed to address financial difficulties affecting, or about to affect, its ability to carry on as a going concern, and that the variation could not reasonably have been avoided. Even where that exception is met, the dismissal can still be found unfair on ordinary principles.
For changes that are not restricted variations, dismissal will not be automatically unfair, but a tribunal must still assess ordinary fairness with reference to the reason for the change, the consultation carried out, and what was offered in return.
Two wider reforms arrive on the same date and raise the stakes further. The cap on unfair dismissal compensation is removed altogether, and the qualifying period for an ordinary unfair dismissal claim drops from two years to six months, which means the ‘less severe’ regime for non-restricted changes will be open to far more employees than it is today.
The commencement date for these provisions is expected to be 1 January 2027, having previously been indicated for October 2026 before the timetable was revised.
Why Did The Timetable And Detail Keep Shifting?
Legislation of this scale is rarely settled in one step. The Government moved the fire and rehire provisions from an earlier expected date into January 2027 as part of a wider phasing of the reforms, and it consulted between February and April 2026 on the finer points of what counts as a restricted variation. The response to that consultation is awaited, and a further consultation on a revised statutory Code of Practice is expected later in 2026.
For employers, the lesson in all this movement is to work from the current position rather than early commentary. A good deal of the material published while the Bill was in progress described proposals that were later changed, which is precisely how confusion takes hold.
What Should Employers Take From All This?
Importantly, the practice has not been banned outright; it has been heavily restricted, and a very limited financial exception survives. That said, the direction of travel is firmly towards making imposed changes to core terms far harder to achieve through dismissal.
The practical response is to reduce the likelihood of ever needing the mechanism. Contracts with clear, lawful variation and flexibility provisions allow sensible changes to be made by agreement. Once the new rules are in force, using dismissal to insert such a clause will itself be a restricted variation, but clauses already agreed, whether in existing contracts or with new starters, are unaffected. Where change is unavoidable, early and meaningful consultation is both a legal expectation and the best way to reach agreement without dismissing anyone.
How Can GAP HR Help You Prepare?
We can review your contracts ahead of the 2027 changes, identify where you may need to vary terms in future, and help you build in the flexibility to do so lawfully. If you are already facing a situation where terms need to change, we will guide you through consultation and agreement, and give you a frank assessment of the risks of any dismissal.
There is no charge for an initial discussion and no obligation to take matters further. Call us now on 01491 598 600 or click here to make an enquiry, and we will be delighted to help you.
Call us now on 01491 598 600 or Click Here to Make An Enquiry and we will be delighted to help you.
