Employment Rights Act 2025: planning ahead for 2027 changes

Although implementation is some way off, schools should start planning now, particularly where contractual changes or recruitment decisions may need to be made before the new rules take effect.

Fire-and-rehire restrictions pushed to 2027

Restrictions on “fire-and-rehire” practices were originally expected in Autumn 2026 but will now come into force in January 2027, giving schools slightly longer to prepare.

Fire-and-rehire refers to dismissing employees to impose contractual changes or re-engage them on new terms. Under the Act, dismissals linked to certain contractual changes (“restricted variations”) or intended to enable re-engagement on varied terms may be automatically unfair.

Although limited financial justifications may apply in narrow circumstances, the reforms will significantly restrict employers’ ability to use dismissal to enforce contractual change. Schools should therefore review any planned contractual variations carefully. As many school contracts require at least a term’s notice to implement changes, projects likely to fall within scope should be progressed without delay.

The most common change which we have seen for independent schools which has required a process of fire-and-rehire has been a change of TPS arrangements, but it can also be necessary in changes to pay scales.

If you would like advice on managing contractual change in light of these reforms, please contact us to discuss your options.

Unfair dismissal changes

From January 2027, the qualifying period for unfair dismissal protection will reduce from two years to six months, and the statutory compensation cap for unfair dismissal claims will be removed. This will increase potential liability, particularly where employees receive higher salaries or valuable benefits (including pensions).

The practical impact will arise earlier. Employees joining from July 2026 will reach six months’ service around the time the new regime takes effect, meaning schools recruiting for the 2026–27 academic year will be managing staff who gain unfair dismissal protection much sooner.

Recruitment and early employment management will therefore become increasingly important. Schools should ensure recruitment processes are robust and that probationary periods are actively managed.

Schools should review (or introduce) probation policies and ensure systems are in place for managing probation effectively, including guidance and training for line managers.

Reviews should also take place early and well before the six-month point, with any performance or conduct concerns addressed and documented promptly. Line managers should also be supported with clear guidance on managing probation and early-stage employment issues.

Timing will be critical. Any dismissal taking effect after six months’ service, including where the employee is still within their probationary period, will fall within the unfair dismissal regime.

A recording of our recent education webinar on preparing for these changes is available for £150 plus VAT and includes both our probation policy and line manager guide. Please let us know if this would be of interest.

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For more information or advice please contact Kiki Dawes or your usual contact within our Employment team.