The Employment Rights Act 2025 is uppermost in the minds of anyone involved with employment law in the UK. Here, Isabella Mason and Ross Meadows of Oury Clark explain how the changes to fire and hire on 1 January 2027 will mean employers must understand what they mean by ‘last resort’.

So-called “fire and rehire” – where an employer dismisses staff and offers re-engagement on new terms when agreement cannot be reached – has often attracted criticism as a means of driving through changes to employment terms. Yet for most employers, it represents a measure of last resort, considered only after extensive engagement and when alternative options have been exhausted.

Since January 2025, employment tribunals have had the power to adjust compensation by up to 25% where an employer or employee unreasonably fails to comply with the Acas Code. While this has not made fire and rehire unlawful in itself, it has significantly raised the stakes. With further fire and rehire reforms under the Employment Rights Act 2025 (ERA 2025) expected to come into force from 1 January 2027, the direction of travel is clear: employers will face tighter scrutiny, reduced flexibility, and fewer practical opportunities when seeking to impose contractual changes.

A shifting legal framework

The ERA 2025 introduces a fundamental shift in how dismissal and re-engagement will be treated. From January 2027, dismissal for a ‘restricted variation’ will be automatically unfair unless it is justified by serious...

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