Employment Rights Act2025 · Tracker
Confirmed for 1 January 2027

The end of fire and rehire: what "restricted variations" means from 1 January 2027

From 1 January 2027, dismissing an employee because they will not agree to a restricted contract variation becomes automatically unfair. A restricted variation covers the core terms: pay, pensions, hours and holiday. This ends most "fire and rehire", where an employer dismisses staff and re-engages them on worse terms to force through a change. Note the date moved: the July 2025 roadmap first indicated October 2026, and the revised timeline pushed the automatically-unfair rule to 1 January 2027. If you need to change terms, the route is agreement and consultation, not dismissal.

What "fire and rehire" is, and what changes

Fire and rehire, sometimes called dismissal and re-engagement, is where an employer cannot get staff to agree to a change in their contract, so it dismisses them and offers to re-engage them on the new, usually less favourable, terms. Under the Act, a dismissal is automatically unfair if the reason is that the employee refused a restricted variation, or to enable the employer to recruit someone else to do substantially the same job on varied terms. Automatically unfair means the usual test of reasonableness does not save the dismissal; it is unfair by definition, which removes the main lever that made fire and rehire work.

What counts as a restricted variation

The protection is focused on the terms that matter most to a worker's security and income:

  • Pay.
  • Pensions.
  • Hours, including shift patterns and working time.
  • Holiday entitlement.

Trying to impose changes to these by dismissing and re-engaging is what becomes automatically unfair. The point is to stop the coercive use of dismissal to rewrite core terms.

General information, not legal advice. This guide explains the fire-and-rehire change confirmed for 1 January 2027. Take advice before any dismissal connected to a change of terms.

The date that moved, and why it matters

This is a good example of why the rollout has to be read as a maintained changelog rather than a fixed poster. The July 2025 roadmap indicated an October 2026 date for the fire-and-rehire reform. After Royal Assent, the revised timeline moved it to 1 January 2027, alongside the unfair dismissal and uncapped-award changes. We use the revised date, and flag the change, because planning against a superseded date is exactly the kind of avoidable error the tracker exists to prevent.

How to change terms the right way

  • Vary by agreement. The safe route is genuine agreement to the change, reached through consultation, not a take-it-or-be-dismissed ultimatum.
  • Consult early and meaningfully. Explain the business reason, listen to alternatives, and document the process. Meaningful consultation is both good practice and evidence.
  • Check for a contractual variation mechanism. Some contracts contain flexibility or variation clauses; take advice on their scope before relying on one.
  • Plan ahead of the date. If a change is coming, start the conversation well before 1 January 2027 so you are not tempted into a shortcut that becomes automatically unfair.

Frequently asked questions

When does the fire-and-rehire change take effect?

It is confirmed for 1 January 2027. The July 2025 roadmap indicated October 2026, but the revised timeline moved it to 1 January 2027.

Which terms are protected?

Restricted variations cover pay, pensions, hours and holiday. Dismissing staff to force through changes to these becomes automatically unfair.

Can I still change contracts at all?

Yes, by agreement reached through genuine consultation. What ends is using dismissal and re-engagement to impose a restricted variation.

Sources

Content accurate as at 12 July 2026. Confirm the commencement date before acting on it.

Planning a change to pay or hours?

The report flags the fire-and-rehire change on your dated timeline, with the actions to take before 1 January 2027.

Get my dated report

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