Employment Rights Act 2025: Fire and rehire protections delayed to March 2027

The Government has recently published an updated implementation timeline for the Act through to the end of 2027. The fire and rehire protections, which were expected in January 2027, will now take effect in March 2027. The protections were originally to be implemented on 1 October 2026 but this further delay is an indication of their complexity.

As well as the updated timeline, which was published on 22 October 2026, the Government published its response to the fire and rehire consultation on changes to expenses, benefits and shift patterns. It also published a consultation paper on the revised Code of Practice on dismissal and re-engagement. The consultation period ends on 17 December 2026.

Background

The Act provides that an employee will be automatically unfairly dismissed if they are dismissed (or replaced) in order for the employer to make changes to core terms in their contract of employment which are protected as “restricted variations.” These include reductions to pay, changes to pensions, changes to total hours, a reduction in holiday entitlement, changes to targets where pay is linked to those targets and changes to shift patterns which are specified in regulations.

A dismissal in order to make a “restricted variation” will be automatically unfair unless the employer can show evidence of financial difficulties affecting its viability and that it has no reasonable alternative. The Government’s aim, through these provisions in the Act, is to introduce legal rights which prevent the use of fire and rehire to change core terms and which protect employees from being forced to accept disadvantageous changes.

On 4 February 2026, the Government consulted on two kinds of potential restricted variations:

Employment expenses and benefits in kind
Shift patterns

The consultation period ended on 1 April 2026 and the Government response was published on 22 October 2026. For more details of the consultation see our previous article.

Consultation response

It is the Government’s view that the threat of fire and rehire can exert undue pressure on employees to accept less favourable conditions and that employers benefit from this one-sided flexibility. The Government is clear that such practices have no place in a modern workplace. At the same time, it recognises that businesses need some flexibility to adapt to changing economic conditions and demands. Accordingly, the right balance needs to be struck “between strengthening protections for employees and ensuring that the regulatory framework remains proportionate and workable for everyone.”

So, what has it decided?

Expenses and benefits in kind

The Government has concluded that it is a proportionate approach to include certain types of travel expenses (including mileage), accommodation expenses and accommodation as a benefit in kind within the scope of restricted variations. This is because it recognises the concerns that, for example, changes to long-term accommodation could result in significant financial loss for employees. Further, in some sectors, such as social care, travel expenses and accommodation expenses are particularly important for employees.

Consequently, unless the financial difficulties exemption applies, considered later, it would be automatically unfair to dismiss someone in order to vary a contractual term for sums payable in respect of travel expenses, accommodation expenses or accommodation as a benefit in kind.

These specific expenses and benefits will be afforded the same protection as core contractual pay. As the Government says, “Including these within restricted variations will provide an additional safeguard and reinforce expectations that employers engage constructively with employees and seek agreement to contractual changes.”

Note that changes to share schemes will not be in scope of the restricted variation.

Regarding other types of expenses and benefits that will not be in scope of the restricted variations, the Government response states that employees can rely on a range of protections to protect these terms from being altered by their employer. Enhanced unfair dismissal protections are contained in the Act and the current (and revised) statutory Code of Practice on Dismissal and Re-engagement requires employers to engage meaningfully with employees and their representatives when seeking to vary contractual terms. There is a potential uplift in compensation of up to 25% where the Code of Practice is not followed by employers.

Shift patterns

The Government has taken account of the complexity and diversity of shift arrangements across sectors. It has also taken into account the potential impact of shift changes on employees’ financial security, caring responsibilities and wellbeing.

The Government has decided that it will be automatically unfair to dismiss someone in order to make a change to contractual shift patterns which would mean:

The employee is required to work in the nighttime (11pm to 6am) where they were not required to before or is required to work in the daytime where they were not before.
The employee is required to work on a weekend where they were not required to before or is required to work on a weekday where they were not before.

Where shift changes do not constitute these “extreme” shift changes (which are in scope of the restricted variation) changes for example, to push a shift back a few hours in the daytime, will be protected under the enhanced unfair dismissal provisions. In those circumstances, Employment Tribunals will be required to consider factors such as whether there has been meaningful consultation with employees and trade unions about a contractual change when determining if a dismissal is fair or unfair.

Regarding next steps, Regulations setting out the details will come into force in March 2027 and to support compliance, the Government will update guidance. The Government is also currently consulting on a revised Code of Practice on Dismissal and Re-engagement, see below.

Consultation on revised Code of Practice on dismissal and re-engagement

The Government is seeking views on the revised Code of Practice and this reflects the new provisions of the fire and rehire protections in the Act and provides practical guidance and good practice where an employer is considering dismissal and re-engagement. As mentioned, the consultation period ends on 17 December 2026.

The current 2024 Code of Practice will be revoked and the new Code of Practice will come into effect in summer 2027 even though the fire and rehire protections take effect earlier in March 2027.

It is important to note that dismissal and re-engagement as used in the Code of Practice covers two practices:

Fire and rehire: the practice of dismissing one or more employees who do not agree to some or all of the contractual changes proposed by the employer and proposing to rehire them with changed terms and conditions.
Fire and replace: where one or more employees are dismissed and replaced with either other employees or non-employees to do substantially the same work and where this is not due to a reduced need for that work.

The revised Code of Practice is structured to follow the reasonable chronological steps which an employer should consider when looking to agree contractual changes and these include:

Information sharing
Meaningful consultation
Reasonableness and conduct
Where changes are agreed or not agreed
Dismissal and re-engagement
Restrictions on dismissal and re-engagement (automatically unfair dismissal and non-restricted variations)
Fire and replace
Employer exemptions and financial difficulties.

Looking specifically at Reasonableness and conduct (section 2.iv) employer reasonableness will generally mean that employers should promptly provide sufficient information to employees and representatives to allow informed engagement, meaningful consultation and allow adequate time for discussion and negotiation. Employee reasonableness means employees should engage in the process in good faith and with a genuine willingness to consider the employer’s case. They should participate constructively in consultation, considering information provided by the employer, putting forward alternative proposals where appropriate and responding within reasonable timeframes. Significantly, the adjustment to compensation also applies to employees and an award can be reduced by up to 25% where the employee has unreasonably failed to comply with the Code of Practice.

Unsurprisingly, the revised Code of Practice includes considerable detail about the Employer exemptions to restrictions on dismissal and re-engagement: Financial difficulties (section 3.iii.5).

It expressly states that, “Dismissal and re-engagement is intended to be used as a last resort and has been designed to be narrow, even where there are severe financial difficulties.” There are different provisions for employers in the private sector, the public sector (excluding local authorities) and local authorities.

For a private sector employer (section 3.5.ii.2), they may be able to meet the narrow financial difficulties exemption if they can demonstrate the following:

The reason for making the restricted variation or replacement with non-employees was to:
- Eliminate the financial difficulties (remove the financial pressures all together)
- Prevent the financial difficulties getting to the point where they would threaten the organisation; or
- Significantly reduce or significantly mitigate the effects of financial difficulties; and
That those financial difficulties were affecting or very likely in the immediate future to affect the employer’s ability to carry on their organisation as a going concern, where otherwise the organisation would be forced to conduct redundancies or the organisation would have to close; and
In all the circumstances, the employer could not reasonably have avoided the need to either dismiss and re-engage an employee to make the restricted variation, or replace them with a non-employee.

The test for a public sector employer (not including local authorities) is broadly the same except that the financial difficulties affect or very likely in the immediate future to affect the employer’s ability to carry out the statutory functions of their organisation. For local authorities, again it is a similar test but that at the time of the dismissal, a relevant intervention direction was in force.

Implementation timetable update

There are some important updates in the timeline published on 22 October 2026 and be aware of the following:

Measures that will take effect on 30 October 2026

The trade union measures include:

Strengthening trade unions’ right of access
Implementing reforms to access and unfair practices during the recognition and derecognition process, and all remaining trade union recognition measures, including freezing the bargaining unit when an application is received
New rights and protections for trade union representatives
Extending protections against detriments for taking industrial action

The harassment measures include:

Requiring employers to take “all reasonable steps” to prevent sexual harassment of their e employees
Introducing an obligation on employers not to permit the harassment of their employees by third parties
Introducing a power that will enable the minister to make regulations at a later date, specifying evidence-based steps which employers must take to prevent sexual harassment (this will complement, not replace, the broader legislative requirement to take all reasonable steps)

Other measures that will be introduced in October 2026

Bringing forward regulations to establish the Fair Pay Agreement Adult Social Care Negotiating Body in England

Measures that will take effect on 1 December 2026

Introducing Seafarer Protection Regulations

Measures that will take effect on 1 January 2027

Reduction of unfair dismissal qualifying period to 6 months, for dismissals from 1 January 2027, and uncapping compensatory awards
The duty to inform workers of their right to join a trade union
Strengthening tipping law (put back from the end of 2026)

Measures that will take effect in March 2027

Fire and rehire protections (put back from January 2027)
Action plans on gender equality and supporting employees through the menopause mandatory for public sector employers

Measures that will take effect in April 2027

Action plans on gender equality and supporting employees through the menopause mandatory for private and voluntary sector employers
Bereavement leave, including pregnancy loss
Extending blacklisting protections – banning blacklists drafted using AI, and banning blacklisting by third parties
Collective redundancy: organisation-wide threshold (this is an important confirmation about the implementation date)

Measures that will take effect in August 2027

Electronic balloting for statutory recognition and derecognition ballots

Measures that will take effect in September 2027

Non-disclosure agreements (NDAs): regulations to prevent the misuse of NDAs in cases of workplace harassment or discrimination

Measures that will take effect in October 2027

Enhanced dismissal protections for pregnant women and new mothers
Flexible working

Measures that will take effect in December 2027

Regulation of umbrella companies

Interestingly, there is no date at the moment relating to the reforms of zero hours and similar contracts. Timings for the introduction of the right to guaranteed hours, the right to reasonable notice and payment for shifts cancelled or changed at short notice will be updated following the consultation process which ran between 2 June 2026 and 25 August 2026. For more details see our article on the zero hours consultation.

Note that missing from the updated timeline (for the second time) is any mention of reinstatement of the two-tier Code provisions which was originally expected in October 2026.

The months ahead will be busy and we will keep you updated via our Employment Rights Act 2025 Hub.