The UK government has announced that under the Employment Rights Bill, new legislation will be introduced which outlaws the practice of dismissal and re-engagement, often referred to as ‘fire and rehire’, whereby employers dismiss employees and then offer them re-employment under new, often less favourable terms. This move is an attempt to protect workers’ rights and prevent employers from forcing employees into accepting detrimental changes to their contracts under the threat of losing their jobs.
Under the new legislation, which could come into force as early as October 2025, it will be automatically unfair to dismiss an employee for refusing a contractual change, except where an employer is in severe financial distress. In those limited circumstances, the employer is still required to comply with the Code of Practice on dismissal and re-engagement and must demonstrate that dismissal was a reasonable response.
This is a big change for employers and will significantly reduce their ability to change any contractual terms. Employers will need to adopt a more collaborative approach to changing employees’ terms of employment, explore alternatives to dismissal and engage in meaningful consultation with employees.
If you need assistance with understanding how these changes will impact your business or with changing employees’ terms of employment, please get in touch with a member of the team.