Fire and rehire redefined
If you want to change a particular term in an employee’s contract which they won’t agree to, you have the option of terminating their existing contract and offering them a new contract which includes the new terms. You can only do this as a last resort and must follow the Acas Code of Practice on dismissal and re-engagement. This process is also known as ‘fire and rehire’.
Dismissals face new tests
The government doesn't think that the current framework sufficiently protects employees. The Employment Rights Act 2025 will impose significant restrictions on the use of fire and rehire. It will become unfair to dismiss an employee refusing a ‘restricted variation’ of their employment contract, unless you are in severe financial difficulties and have no reasonable alternative.
A ‘restricted variation' includes changes to pay, hours, holidays, or anything else the government decides to include in further regulations.
Not all changes will come under this banner, but many will and this will severely limit your ability to utilise this process for enforcing changes your staff will not agree to.
How to prepare
The government is consulting on whether all expenses and benefits in kind should count as restricted variations, and also considering extra protections for staff whose shifts are changed. If you plan to alter staff terms and conditions, you may want to begin consultation now and, if needed, implement changes before the new rules take effect.
It’s also worth reviewing your current contracts to see whether existing variation clauses allow you to lawfully make certain changes without an employee expressly agreeing to it or relying on fire‑and‑rehire. You won’t be able to add new variation clauses through fire‑and‑rehire once the new regime applies, as that would itself be a restricted variation, but in some cases you may still rely on clauses already in place.