Amidst the sweeping reforms ushered in by the Employment Rights Act 2025 (ERA 2025), the rules governing dismissal and re engagement, commonly known as 'fire and rehire', are set to be significantly restricted. The result is that all employers, even those who have never considered or engaged in the practice, will need to exercise considerable caution when approaching contractual variations.
'Fire and rehire' has been criticised due to the inherent power imbalance in the employment relationship. While fire and rehire will not be abolished outright, its use will be heavily curtailed from 1 January 2027 due to the changes brought in by the ERA 2025.
Under the new regime, an employee’s dismissal will be automatically unfair where the reason relates to their refusal to accept a 'restricted variation', or where the employer seeks to re-engage them (or replace them) on altered terms involving such a variation. Restricted variations are defined very broadly and include:
See our detailed analysis of changes to the law on fire and rehire.
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