What new restrictions will there be on ‘fire and rehire’ practices?

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The Employment Rights Act introduces major reforms to UK employment law, with changes being implemented in stages from December 2025 through to 2027.

Employment Rights Act

Published date

05 Aug 2026

The Act places significant new restrictions on the use of ‘fire and rehire’, where an employer dismisses workers and offers to re-engage them on less favourable terms and conditions.

Under the new rules, it will usually be automatically unfair to dismiss an employee because they refuse to accept certain changes to key contractual terms, including changes relating to pay, pensions, working hours, shift patterns and time off. It will also generally be automatically unfair to dismiss employees and replace them with other workers, agency workers or contractors to carry out substantially the same work on less favourable terms.

There is a limited exception where an employer can demonstrate that the business is facing severe financial difficulties and that the contractual changes are necessary to help the business continue operating, with no reasonable alternative available.

The new protections are expected to come into force in January 2027.

What this means for union reps

Employers will face much greater legal restrictions on using dismissal as a tool to force workers to accept worse terms and conditions.
Reps should expect employers to place greater emphasis on negotiation and consultation where changes to terms and conditions are proposed.
Where employers seek significant contractual changes, reps should engage early, seek advice from their union and scrutinise any claims that changes are necessary because of financial difficulties.
The new protections should strengthen the position of workers and unions when resisting detrimental changes to pay, hours, pensions and other key contractual terms.

Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from your union, a source on our free help page or an independent financial advisor before taking any action.

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