Workforce planning and contracts
Preparing your workforce for significant change
The Employment Rights Act introduces a number of changes that will affect how employers recruit, manage and retain their workforce. From expanded unfair dismissal protections and changes to flexible working, through to new rules around fire and rehire practices and zero-hours contracts, employers will need to review their current policies, processes and workforce strategies.
These reforms will have a practical impact on employment contracts, workforce planning, management processes and day-to-day decision making. Employers should begin preparing now by understanding the changes, reviewing existing arrangements and ensuring managers are equipped to navigate the new requirements.
Fire and rehire
Greater restrictions on changing contractual terms
The Employment Rights Act introduces significant restrictions on "fire and rehire", also known as dismissal and re-engagement.
The reforms will make certain fire and rehire dismissals automatically unfair where the employer is seeking to impose a "restricted variation" to an employee's contract and the employee does not agree to the change.
A restricted variation includes changes involving:
A reduction in pay.
Where pay relates to the amount of work done, a variation to that measure.
A variation to a term or condition relating to pensions or pension schemes.
A variation to working hours.
A variation to the timing or duration of shifts.
A reduction in the amount of time off to which an employee is entitled.
A variation specified in future regulations.
The use of a contractual variation clause which enables the employer to make any of these changes without the employee's agreement.
The Government's July 2026 timeline update confirmed that the fire and rehire provisions are now expected to take effect in January 2027, rather than October 2026 as originally anticipated.
Employers should:
Review existing contractual change processes.
Consider how proposed changes to pay, hours, shifts, pensions and other terms could be affected.
Ensure meaningful consultation takes place before seeking contractual changes.
Keep clear records of the reasons for proposed changes and alternatives considered.
Take advice before considering dismissal and re-engagement.
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Unfair Dismissal
The Employment Rights Act introduces significant changes to unfair dismissal protection.
The current qualifying period for bringing an ordinary unfair dismissal claim is expected to change, increasing the number of employees who will benefit from protection earlier in their employment.
The reforms mean employers will need to consider their recruitment, probation and performance management processes carefully. Stronger procedures and better manager awareness will become increasingly important when managing capability, conduct or performance concerns.
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Employers should:
Review probation and onboarding processes
Ensure managers understand fair dismissal procedures
Strengthen documentation and performance management processes
Review employment policies ahead of implementation
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Flexible working
The Employment Rights Act builds on recent flexible working reforms, which have already made flexible working a day-one right for employees.
Further changes are expected to strengthen the framework around flexible working requests, including increasing expectations on employers when considering and responding to requests.
Flexible working will continue to be an important part of workforce planning, recruitment and retention strategies.
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Employers should:
Review flexible working policies and procedures
Ensure managers understand their responsibilities
Consider how flexible working supports workforce planning
Ensure requests are handled consistently and fairly
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Zero and low hours contracts
The Employment Rights Act introduces new protections for workers engaged on zero-hours contracts and low-hours arrangements.
The reforms are intended to provide greater predictability for workers, including rights relating to guaranteed hours and reasonable notice of changes or cancellations to shifts.
The changes will require employers to review how they use variable working arrangements and consider whether current workforce models remain appropriate.
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Employers should:
Audit existing zero-hours and low-hours arrangements
Identify workers who may be affected
Review scheduling and shift management processes
Consider whether alternative contractual arrangements may be more appropriate
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