Employment Rights Bill | Fire and Rehire

Employment law changes will make it automatically unfair to dismiss staff for refusing contract changes or rehiring on worse terms.

The Government is proposing to make it automatically unfair (this becomes a day 1 right for employees) to dismiss employees where the reason for dismissal is either:

1. The employer sought to vary the employees contract of employment and the employee did not agree - OR -
2. The reason is to enable the employer to employ another person, or to re-engage the same employee under a varied contract of employment to carry out substantially the same duties as the employee carried out before dismissal.

A Statutory Code of Practice was introduced in July 2024 and is a guide for employers regarding what steps should be taken before termination. There is a very limited defence for the employer - when the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business, and in all the circumstances the employer could not reasonably have avoided the need to make the variation.

UPDATE - July 2025

On 7th July 2025, the Government published proposed amendments to the Employment Rights Bill, including important updates for fire and rehire practices.

At this stage, these are only proposals and will be subject to consultation before it is decided if, how, and when they will be implemented.

What’s Changing?

• Proposal to soften the ban.
• The government plans the restrictions on fire and rehire to only apply to specific contract changes—namely pay, pension, hours of work, holiday entitlement, and any other areas set out in regulations.
• Employers will not be able to bypass these restrictions by introducing a new variation clause, although existing clauses will remain valid. Therefore it is really important that you review your contracts of employment now to ensure that if it is not already included, that you get a variation clause in place.  Please contact the Bira Legal Advice Team for further information.
• Changes to place of work or duties are not on the restricted list. Dismissals due to refusal to relocate will not become automatically unfair, and normal redundancy rules will continue to apply.
• If an employee is dismissed for refusing a contract change that isn’t on the restricted list (e.g., routine amendments), it will not be automatically unfair. However, normal unfair dismissal rules and strict consultation requirements will apply.
• There is also a proposal for dismissals based on outsourcing as an alternative to redundancy to be automatically unfair, unless the employer can prove serious financial distress.
• These are significant policy shifts. The government plans to consult on the regulations covering fire and rehire provisions this autumn, with the new rules expected in autumn 2026. Further details on exactly which contract variations are restricted will be set out in those regulations.