Consultation fire and rehire: changes to expenses, benefits and shift patterns

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.

However, it is important to mention that these types of contract changes can be made if the employee agrees to the change or if the change is agreed through collective bargaining. In addition, dismissals related to changes in non-core terms will not be an automatic unfair dismissal but may be an ordinary unfair dismissal and future regulations will specify the factors for the Employment Tribunal to take into account in deciding whether a dismissal is unfair in a fire and rehire scenario (for example, was there meaningful consultation?)

The consultation paper was issued on 4 February 2026 and the consultation period ends on 1 April 2026. The Government is consulting on two kinds of potential restricted variations:

• Employment expenses and benefits in kind
• Shift patterns

Employment expenses and benefits in kind

In section 1, views are sought on which expenses and benefits in kind should be excluded from the scope of the restricted variation of reductions to pay. As the consultation paper states, some expenses and benefits in kind may not be integral to the employment relationship and the limited effect of the changes on employees could be outweighed by a business need to make organisational changes. Expenses incurred by the employee in connection with carrying out their duties do not have the same character as pay which is remuneration in exchange for work done. The consultation paper refers, for example, to travel expenses. These cover a broad range of arrangements and the Government’s view is that employers should have flexibility to make reasonable operational changes to update arrangements for travel expenses to suit changing circumstances. In relation to benefits and payments in kind, these can range from gym memberships to participation in share schemes.

The Government has identified two options for excluding expenses and benefits in kind.

Option 1 – All expenses and benefits or payments in kind are excluded from the restricted variation of sums payable to an employee in connection with the employment. Under this option, a dismissal made to change the contract to reduce or remove any expenses or benefits in kind would not be an automatic unfair dismissal but could potentially be an unfair dismissal depending on how the change was effected.

Option 2 – All expenses and benefits or payments in kind are excluded apart from certain types of: share schemes, travel expenses and accommodation. They would only be in scope if they can be clearly delineated as having “an equivalent character to pay and form part of the employee’s remuneration package.”

Subject to comments received during the consultation process, the Government’s preferred option is Option 1.

Shift patterns

In section 2, the Government is seeking views on whether there are any types of changes to shift patterns which should be protected as a restricted variation. This needs to take into account the “balance between protecting employees from unfair unilateral changes, with the legitimate interests of a business in adapting to changing circumstances and customer needs.”

The Government has identified two options for the treatment of shift pattern changes.

Option 1 – Shift changes from day to night working (or vice versa), and weekday to weekend working (or vice versa), will be restricted variations.

This limited category of shift changes constituting “restricted variations” would give employers flexibility to make the majority of shift pattern changes while preventing changes that would have extreme effects on an employee. For instance, the implications for those with caring responsibilities.

Option 2 – No types of shift pattern changes are in scope of the restricted variation of the timing or duration of a shift.

Under this option, dismissals related to changes to the timing or duration of a shift would not give rise to automatic unfair dismissal but an employee may still have protection from ordinary unfair dismissal.

Subject to comments received during the consultation process, the Government’s preferred option is Option 1.

The fire and rehire protections were originally to be implemented on 1 October 2026 but have been put back to January 2027.

Finally, there is a helpful link to the list of the Government’s open and closed consultations at the end of this article. It is a very useful reminder of where we are with all the consultations and especially useful for employers that may want to respond on an issue particularly relevant to their organisation. We are still waiting for some key consultation papers. These include ending the exploitative use of zero hours contracts and the collective redundancy threshold. Both these measures are to be implemented in 2027.

Useful links

• Government consultations
• Consultation Fire and rehire changes to expenses benefits and shift patterns