Reform of rules on dismissal and re-engagement
Implementation date: Not expected before 2026
The Employment Rights Bill includes provisions to reform the rules on the use of dismissal and re-engagement (known as "fire and rehire").
Under the Bill, a dismissal will be automatically unfair if the principal reason for the dismissal was:
- that the employee refused to agree to a variation of their contract; or
- to enable the employer to employ another person, or to re-engage the employee, under a varied contract of employment to carry out substantially the same duties.
The dismissal will not be automatically unfair if the employer can show that the variation of contract was necessary because of financial difficulties affecting its ability to carry on the business and that the need for the variation could not reasonably have been avoided.
On 4 March 2025, the Government published its response to its consultation on Making Work Pay: collective redundancy and fire and rehire in which it confirmed that it intends to "gather further views on updating the Code of Practice on Dismissal and Re-engagement in 2025 to ensure that it reflects the changes to fire and rehire made by the Employment Rights Bill".
It is not yet known when these measures will come into force. In its Next Steps to Make Work Pay policy paper, the Government said that it anticipates that "the majority of reforms will take effect no earlier than 2026".
