Does the new code apply to me if I was dismissed before 1 October 2026?

No. The code applies to dismissals on or after 1 October 2026. Earlier dismissals are decided under the general unfair dismissal test set out in the Employment Rights Act 1996 and the principles in USDAW v Tesco.

Can my employer use fire and rehire if I am on maternity leave?

The code and the existing pregnancy and maternity protections make this very difficult to justify. You have the right to be offered a suitable alternative vacancy on no less favourable terms if redundancy is the reason, and most fire and rehire dismissals will be hard to defend while you are protected.

Is a 25 per cent uplift automatic if my employer ignores the code?

The uplift is mandatory where the tribunal finds the employer has unreasonably failed to comply with the code and the failure did affect the outcome. The judge has a narrow discretion to reduce it where the breach was minor and made no practical difference.

Do I need two years’ service to claim unfair dismissal in a fire and rehire?

Not in the automatically unfair route. From 1 October 2026, a dismissal for refusing to accept reduced terms or for non compliance with the code is automatically unfair, which removes the two year qualifying period and removes the cap on the compensatory award.

Can I be dismissed and re engaged on worse terms if I have a union?

The code applies equally, but a collective agreement reached with a recognised trade union is treated as a genuine variation and is excluded from the code. If the agreement is not in fact freely negotiated, the employer cannot shelter behind that label.

An empty break room with a stack of printed letters on a chair by the window in afternoon daylight

Code of practice

Fire and rehire: the new statutory code takes effect

Updated 6 October 2026

You have the right to be consulted properly before your employer dismisses you and offers your job back on worse terms. You have the right to be given the business reasons in writing, the financial evidence and the time to respond. You have the right to challenge a fire and rehire in the employment tribunal within three months of the date your new contract starts, with the protection of the new statutory code from 1 October 2026.

What is fire and rehire and when is it allowed

Fire and rehire is the practice where your employer ends your existing contract, usually by dismissing you, and then offers you a new contract on less favourable terms. The terms most often reduced are basic pay, hours, pension contributions, overtime rates, shift premiums, holiday entitlement and redundancy pay protection.

Fire and rehire is not, in itself, automatically unlawful. The Supreme Court confirmed in USDAW v Tesco Stores in 2025 that a tribunal must look at whether the employer had a sound business reason and a fair process, not at the label on the dismissal letter. The new statutory code of practice, laid before Parliament in the summer and in force from 1 October 2026, builds on that judgment and turns the consultation steps into something employment judges must follow when assessing compensation.

The code applies to a dismissal on or after 1 October 2026 where the employer’s stated or principal reason is to vary terms and conditions and the employee is re-engaged on different terms. It does not apply to genuinely voluntary variations, to collective agreements reached with a recognised trade union, or to changes driven by a transfer under TUPE.

The code also catches so called “fire and replace” situations, where your employer brings in new staff on the cheaper terms rather than re-engaging you. If the reason for the change is the same, the code applies.

A row of lockers in a quiet staff corridor with a single fluorescent light on the interior ceiling

What the new code requires your employer to do

The code sets out a series of steps an employment judge will expect to see in the file. They are not optional extras. Missing them is the single biggest driver of the 25 per cent uplift.

1. Set out the proposal in writing. Your employer should give you a written explanation of the change, the business reason and the financial case, at least four weeks before any dismissal. The case has to be specific to your workplace. A generic “we need to save money” letter is not enough.

2. Consult properly with the affected employees or their union. That means a real opportunity to understand the proposal, to ask questions, to propose alternatives and to receive a considered response. The consultation should not be a one off meeting with a clock ticking.

3. Explore alternatives to dismissal. Before moving to fire and rehire, your employer should look at options such as recruiting freezes, reduced hours across the whole workforce, voluntary redundancy, changes to overtime or shift working, deferring the change, and any genuinely different proposals raised during consultation.

4. Allow time for the consultation to be meaningful. A tribunal will look at whether the timetable allowed employees to take advice, raise alternatives and understand the financial case.

5. Confirm the decision in writing and explain the right of appeal. If the employer proceeds with dismissal, the dismissal letter should set out the business reasons, the alternatives considered, the consultation undertaken and the appeal route.

What counts as automatically unfair dismissal for fire and rehire

From 1 October 2026, a dismissal for the purpose of varying terms and conditions is treated as automatically unfair in two key scenarios.

The first is where the employer has not complied with the code. The tribunal will look at whether the employer followed the code in substance, not at whether there is a paper trail that ticks every box. Missing the consultation step or refusing to engage with alternatives will weigh heavily.

The second is where the employer has dismissed you because you refused to agree to a reduction in your terms and conditions. This is the protected refusal route. The protection covers refusal of any variation that would reduce contractual entitlements, not only pay.

If the dismissal is held to be automatically unfair, there is no two year qualifying service requirement, no cap on the compensatory award and you can bring a claim without the usual minimum service.

The 25 per cent uplift on compensation

Where the employer has unreasonably failed to comply with the code, a tribunal must increase any award by 25 per cent. The uplift applies on top of any other award. The compensatory award for unfair dismissal, any protective award for failure to consult on collective redundancies, and any award for unlawful deduction of wages can all carry the uplift.

The tribunal can also reduce the uplift if it considers that the failure to comply with the code did not affect the outcome. In practice, that is a narrow window. A judge is more likely to leave the full 25 per cent in place where the missing step is consultation on alternatives, because that is the part the employee could not fix after the event.

For a long serving employee on a median full time salary, the 25 per cent uplift can add a four figure sum to the compensatory award alone. Combined with the uncapped award in the automatically unfair route, the financial pressure on an employer that has not followed the code is significant.

How to challenge a fire and rehire step by step

Step 1. Ask for the business case in writing. If you have not already received it, put the request in writing and keep a copy. The code requires a written explanation at least four weeks before dismissal.

Step 2. Raise alternatives in writing. List the alternatives you would like the employer to consider and keep a copy. This is the single most important step if the case later ends up in a tribunal, because it shows the employer had options on the table.

3. Check the consultation timetable. If you have been given less than four weeks, or the timetable does not allow time to take advice, flag this in writing. The code is explicit on minimum timeframes.

4. Check Acas early conciliation. The new rules that came in on 30 October 2026 reduce the qualifying period for many claims, but the early conciliation step still applies to most employment tribunal claims. You can start the process at Acas early conciliation. Early conciliation pauses the time limit while you are negotiating.

5. Consider an appeal. Most fire and rehire dismissals carry a right of internal appeal under the employer’s own policy. Use it. An appeal does not pause the tribunal clock, but a strong appeal outcome can make a tribunal claim shorter and more focused.

What to do in the meantime

If you have been told that fire and rehire is on the table, ask for the business case in writing, ask for at least four weeks to consider it and ask for the alternatives to be explored in a proper consultation. If you have already been dismissed, do not sign the new contract under pressure and check the dates for any Acas early conciliation and tribunal claim. You have three months from the date the new contract starts (or, if you did not sign it, from the date of dismissal) to bring a claim, and the new code applies to any dismissal on or after 1 October 2026.

Quick answers

Does the new code apply to me if I was dismissed before 1 October 2026?: No. The code applies to dismissals on or after 1 October 2026. Earlier dismissals are decided under the general unfair dismissal test set out in the Employment Rights Act 1996 and the principles in USDAW v Tesco.
Can my employer use fire and rehire if I am on maternity leave?: The code and the existing pregnancy and maternity protections make this very difficult to justify. You have the right to be offered a suitable alternative vacancy on no less favourable terms if redundancy is the reason, and most fire and rehire dismissals will be hard to defend while you are protected.
Is a 25 per cent uplift automatic if my employer ignores the code?: The uplift is mandatory where the tribunal finds the employer has unreasonably failed to comply with the code and the failure did affect the outcome. The judge has a narrow discretion to reduce it where the breach was minor and made no practical difference.
Do I need two years’ service to claim unfair dismissal in a fire and rehire?: Not in the automatically unfair route. From 1 October 2026, a dismissal for refusing to accept reduced terms or for non compliance with the code is automatically unfair, which removes the two year qualifying period and removes the cap on the compensatory award.
Can I be dismissed and re engaged on worse terms if I have a union?: The code applies equally, but a collective agreement reached with a recognised trade union is treated as a genuine variation and is excluded from the code. If the agreement is not in fact freely negotiated, the employer cannot shelter behind that label.