Fire-and-rehire isn't banned. Here's what's actually changed
Updated August 6, 2026
Dismissing staff purely to force through worse contract terms is now automatically unfair in most cases. Fire-and-rehire itself hasn't been banned outright: an employer keeps a narrow defence if it can show a genuine business necessity for the change. That's a much tighter path than the general fairness test dismissals used to be judged against.
What fire-and-rehire actually means
Fire-and-rehire, sometimes called dismissal and re-engagement, is a tactic employers use to change contract terms an employee won't agree to. Instead of negotiating, the employer terminates the existing contract and offers a new one on worse terms, often with little time given to weigh it up. Refuse the new contract and you're out of a job. Accept it and you keep working, just for less pay or under a worse rota.
It has always been legally possible in principle, because an employer can dismiss for "some other substantial reason" under unfair dismissal law, provided the dismissal is fair in all the circumstances. That's the door reform is trying to narrow, not shut.
Why it was targeted
The practice drew sustained political attention after high-profile cases where large numbers of staff were dismissed and told to reapply on inferior contracts, sometimes with almost no warning at all. Whatever the specific facts of any one dispute, the pattern worried lawmakers: employees with years of service losing their terms overnight, with the tribunal system offering redress only after the event, if at all.
The government's response builds directly on machinery that already existed rather than starting from nothing.
The existing statutory code of practice
A statutory Code of Practice on dismissal and re-engagement has applied since mid-2024. It doesn't ban fire-and-rehire. It sets out how an employer should behave if it's considering it: consult properly, share information, explore alternatives, and treat dismissal and re-engagement as a genuine last resort rather than a first move in a pay negotiation. Tribunals can already apply an uplift of up to 25% to certain awards where an employer unreasonably fails to follow the Code. That uplift is the enforcement teeth the Code always had, and the newer restrictions sit on top of it rather than replacing it.
What the newer restrictions add
The Employment Rights Act 2025 goes further than a code an employer can weigh up and sometimes choose to ignore. It makes it harder to treat an employee's refusal to accept worse terms, on its own, as a fair reason to dismiss. Where an employer's real purpose is to remove existing contract terms and replace them with less favourable ones, dismissal for that purpose becomes automatically unfair in most circumstances, rather than something weighed case by case against a general fairness standard.
Exactly when this takes effect is still working through in stages. The Act received royal assent on 18 December 2025, but its provisions commence on different dates rather than all at once, so treat any specific date you see for the fire-and-rehire provisions as something to check against gov.uk before relying on it. Our timeline of what's changed under the Employment Rights Act tracks commencement dates as they're confirmed.
The genuine business necessity exception
The restriction isn't absolute. An employer retains a narrow defence where it can show a genuine business necessity for changing terms. In practice that is likely to mean something close to:
- evidence of real financial difficulty threatening the survival of the business, or its ability to keep the workforce employed at all
- no reasonably available alternative to changing the contract terms
- meaningful consultation with affected staff before any dismissal, not after
A bare assertion of "commercial reasons" is unlikely to be enough on its own. The bar is meant to sit closer to genuine survival than to ordinary cost-cutting, and an employer relying on the exception still has to show it met the consultation standards the Code of Practice already sets.
Comparing the two regimes
| Question | Code of Practice (since mid-2024) | Newer statutory restriction |
|---|---|---|
| Does it ban fire-and-rehire? | No, it sets expected process | No, but it narrows when it's lawful |
| What happens if an employer ignores it? | Tribunal can uplift certain awards by up to 25% | Dismissal can be automatically unfair |
| Is there a way round it? | Follow the Code's consultation steps | Genuine business necessity, narrowly applied |
If you think you're facing it
If your employer has threatened to dismiss and re-engage you on worse terms, the effective date of your dismissal, whenever that turns out to be, is what starts the clock on any tribunal claim. Working out that clock, and the Acas early conciliation step you'll almost certainly need to go through first, is exactly what our tribunal deadline calculator is built for, including how the rules differ depending on whether your dismissal falls before or after the October 2026 transitional date. Keep a written record of what you were told and when, and don't sign a new contract under pressure without reading it properly first.
This page explains the general shape of the fire-and-rehire restrictions as currently understood. It isn't a substitute for advice on your specific contract, your employer's stated reasons, or the commencement date that applies to your case, and because those provisions are still commencing in stages, some of what's written here may already be out of date by the time you read it.