Fire and Rehire (Dismissal & Re-engagement) Compliance Check

Why this matters

“Fire and rehire” — dismissing employees and re-engaging them on new, less favourable terms when they won’t agree to a variation by consent — has been used by UK employers for years as a way to push through contract changes such as pay cuts, reduced benefits, or altered shift patterns. The Employment Rights Act 2025 ends that as a routine option. From the provisions taking effect in autumn 2026, dismissing an employee for refusing a variation of contract, then re-engaging them (or replacing them) on materially the same role but worse terms, is automatically unfair dismissal in almost all circumstances — regardless of length of service, because the day-one unfair dismissal right applies. The narrow exception is where the employer can show the changes were genuinely necessary to avoid serious financial difficulties that threatened the business’s ability to continue, and even then a fair and reasonable process must be followed.

This is a significant tightening of the previous position, where fire and rehire was lawful provided a fair procedure was followed and there was a sound business reason — the standard used in high-profile disputes like P&O Ferries. Employers who still rely on “agree the change or be dismissed and re-offered a role” as a negotiating tactic are now exposed to uncapped compensatory awards, because unfair dismissal in these circumstances sits outside the normal statutory cap. Any business planning to restructure pay, benefits, hours or working patterns needs a genuine consultation and agreement process in place well before this provision lands, rather than treating dismissal as a fallback lever.

What you'll need

• Details of any contract changes you are planning or have recently made (pay, hours, benefits, location, shift patterns)
• Copies of any letters proposing new terms or threatening dismissal if terms aren't accepted
• Records of any consultation carried out with affected staff or their representatives
• Whether the business is facing genuine financial difficulty that could justify the narrow exception

What you'll get

A personalised compliance report covering: a score out of 100, an executive summary, a list of findings ranked by severity, and a prioritised action plan with timeframes.