Fire and rehire -- dismissing an employee to reimpose their role on worse terms -- is restricted under the Employment Rights Bill, which makes the practice automatically unfair in most circumstances. This guide explains the new restrictions, the narrow exceptions, and what employees can do if it happens to them.
What Fire and Rehire Is
Fire and rehire, also known as dismissal and re-engagement, describes an employer dismissing an employee who refuses to accept a contractual change -- such as reduced pay, fewer benefits, or altered hours -- and then offering to re-employ them in the same or a similar role on the new, less favourable terms.
The New Restriction
The Employment Rights Bill makes dismissal for refusing a contract variation, followed by re-engagement on materially the same role, automatically unfair in most circumstances. This replaces the previous position where an employer could more readily defend the practice as a fair dismissal for "some other substantial reason", giving employees stronger protection against being pressured into accepting worse terms.
The Genuine Business Need Exception
A narrow exception allows fire and rehire where an employer can show the changes were genuinely necessary due to financial difficulties threatening the survival of the business, and that there was no reasonable alternative. The bar for relying on this exception is intended to be high, rather than providing a routine way for employers to sidestep the general restriction.
Remedies and Compensation
Where a dismissal and re-engagement is found to be automatically unfair, an employee can bring an unfair dismissal claim to an employment tribunal, which can award a basic award and a compensatory award reflecting lost earnings and other losses, without the employee needing to show the employer acted unreasonably in the way ordinary unfair dismissal claims otherwise require.
Collective Consultation
Where an employer proposes to dismiss and re-engage 20 or more employees at one establishment within 90 days, existing collective consultation obligations can still apply, requiring consultation with recognised unions or elected employee representatives before proceeding, on top of the new automatic unfairness protection for individual claims.
Frequently Asked Questions
What does "fire and rehire" mean?
Fire and rehire, also called dismissal and re-engagement, describes an employer dismissing an employee who refuses to accept a change to their contract -- such as reduced pay or fewer benefits -- and then offering to re-employ them in the same or a similar role but on the new, less favourable terms.
Is fire and rehire now banned outright?
Not entirely banned, but the Employment Rights Bill makes dismissal for refusing a contract variation, followed by re-engagement on materially the same role, automatically unfair in most circumstances, replacing the previous position where an employer could potentially defend the practice more easily as a fair dismissal for "some other substantial reason".
Are there any exceptions where fire and rehire is still allowed?
Yes -- the reforms include a narrow exception where an employer can show the changes were genuinely necessary due to financial difficulties threatening the survival of the business, and that there was no reasonable alternative, but the bar for relying on this exception is intended to be high rather than a routine escape route.
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Does this mean employers can never change employment contracts?
No -- employers can still seek to agree contractual changes through negotiation and genuine consultation with staff or their representatives; the restriction specifically targets using dismissal as a tool to force through changes an employee has refused, rather than banning contractual variation by agreement altogether.
What compensation is available if I am dismissed and re-engaged unlawfully?
Where a dismissal and re-engagement is found to be automatically unfair, an employee can bring an unfair dismissal claim to an employment tribunal, which can award compensation including a basic award and a compensatory award reflecting lost earnings and other losses, without needing to prove the employer acted unreasonably in the way ordinary unfair dismissal claims otherwise require.
Do I need two years' service to bring a fire and rehire claim?
The wider Employment Rights Bill reforms are also removing the standard two-year qualifying period for ordinary unfair dismissal in many cases, moving towards day-one protection, which is particularly relevant to fire and rehire situations since affected employees may otherwise have had short service with their employer.
Does the fire and rehire restriction apply to redundancy situations?
Genuine redundancy dismissals, where a role is truly no longer needed, are a different legal category from fire and rehire, which specifically involves an employer wanting to keep the role but on worse terms -- an employer cannot use a "redundancy" label to disguise what is really a fire and rehire exercise without risking a successful unfair dismissal claim.
What should I do if my employer threatens fire and rehire?
Seek advice from ACAS, a trade union if you are a member, or an employment solicitor before agreeing to any new terms, keep records of all communications about the proposed changes and any consultation carried out, and consider whether the employer has followed a fair and genuine process before deciding how to respond.
Does collective consultation still apply to fire and rehire situations?
Where an employer proposes to dismiss and re-engage 20 or more employees at one establishment within 90 days, the existing collective consultation obligations under TUPE and redundancy law can still apply, requiring consultation with recognised unions or elected employee representatives before proceeding.
When do the fire and rehire restrictions take effect?
The Employment Rights Bill provisions on fire and rehire are being implemented following Royal Assent and the completion of related secondary legislation and statutory guidance, with government roll-out announcements confirming exact dates -- checking gov.uk for the current implementation timetable is the reliable way to confirm what currently applies.
Disclaimer: This guide reflects the Employment Rights Bill fire and rehire reforms as understood for 2026/27; exact commencement dates depend on secondary legislation. This guide is for general information only and is not professional advice. Consult a qualified employment law adviser and refer to gov.uk for current official guidance before relying on any treatment.
