Fire and rehire protections delayed until March 2027

Background

The Employment Rights Act 2025 (the Act) makes it automatically unfair to dismiss an employee in order to change certain core terms, called "restricted variations". These include reductions in pay, changes to pensions, changes to total hours, reductions in leave, and specified shift pattern changes. It will also be automatically unfair to replace an employee with a non-employee doing substantially the same work. The only exception is a narrow exemption for severe financial difficulty. Changes to other terms will attract enhanced ordinary unfair dismissal protection.

When the changes will take effect

The protections and related regulations are now expected to come into force in March 2027. The existing Code of Practice on dismissal and re-engagement will be withdrawn then, but the replacement is not expected until summer 2027, leaving a period when the new protections will apply without the revised Code in place.

Which changes will be covered

The Government’s consultation response confirms that the protected changes will include contractual travel expenses, including mileage, accommodation expenses and long-term accommodation provided as a benefit. Share schemes are excluded. These protections apply only where the entitlement is part of the employee’s contract and the contract does not allow the employer to change it.

For shift patterns, the protected changes will be from day work to night work (between 11pm and 6am), or vice versa, and from weekday to weekend work, or vice versa. Changes to availability windows are excluded. Other changes, such as moving a daytime shift by a few hours, will not be automatically unfair but will remain subject to a stronger fairness test.

What the draft Code expects

The draft Code sets out the process employers should follow when seeking changes and considering dismissal and re-engagement. It emphasises sharing clear information early, including the reasons and evidence for the proposals, and consulting while the plans can still change. Where a trade union is recognised, collective bargaining should be the main route for discussion. Employers should explore alternatives and consider what they might offer to secure agreement. Dismissal and re-engagement should be a last resort; employers should contact Acas before raising it and must not use it as a negotiating threat.

Next steps

The draft is open for consultation until 17 December 2026. If finalised, tribunals will have to take it into account and, in relevant cases, may increase compensation by up to 25% if an employer unreasonably fails to follow it. People managers should review contractual expense and shift terms, plan proposed changes well ahead of March 2027 and keep a clear record of the information shared, consultation and alternatives considered.

For more information or advice, please get in touch with Sharmin Chowdhury in our Employment team.