Fire and rehire restrictions
The government now plans for the fire and rehire limits to start in March 2027, moved from 1 January 2027. From then, dismissing an employee and re-engaging or replacing them to force through a worse core contract term will be automatically unfair, with no qualifying service required and uncapped compensation. A narrow exception applies only where the business faces severe financial difficulty.
Fire and rehire limits now planned for March 2027
What happened
On 22 October 2026 the government moved the start of the fire and rehire limits from January to March 2027. It also said which job changes will be covered. These include some travel and housing costs, and moving staff between day and night shifts or weekday and weekend shifts.
What it means for you
Fire and rehire means letting someone go and taking them back on worse terms. From March 2027, doing this to push through these changes will count as unfair. Talk to your staff and agree changes with them first.
Dates to know
- 17 December 2026Last day to comment on the new guide for employers, called a code of practice.
- March 2027Planned start of the fire and rehire limits.
- Summer 2027The new code of practice is due to start.
Source: GOV.UK, Department for Business and Trade. We check this page every week. Last checked .
Fire and rehire is the practice of dismissing an employee and immediately re-engaging them, or replacing them, on worse terms, used to force through contract changes an employee won't agree to. Once in force, planned for March 2027, section 28 of the Employment Rights Act 2025 makes this automatically unfair dismissal where the employee is dismissed for refusing a restricted variation of pay, pensions, hours or holiday entitlement, or where they are dismissed and replaced to achieve the same result another way. There is no minimum length of service required to bring this claim, and compensation is uncapped. A narrow exception exists where the employer can show the business faced severe financial difficulty threatening it as a going concern, the variation was unavoidable, and it was aimed specifically at addressing that difficulty. Only the power to make implementing regulations was brought into force early, in January 2026; the substantive protection itself is not yet in force.
What exactly does the restriction cover?
It becomes automatically unfair to dismiss an employee because they refuse a restricted variation of their contract, or to dismiss and replace or re-engage them, including via a new hire or contractor doing substantially the same work, to achieve that varied term another way. The detail of what counts as a restricted variation, expected to cover pay, pensions, hours and holiday, is set by regulations. The government's response of 22 October 2026 says regulations will keep most expenses and benefits in kind out of scope, but will cover travel expenses (including mileage), accommodation expenses and accommodation provided as a benefit in kind. Changes to share schemes will not be covered. A change that moves an employee between daytime and night-time work (night meaning 11pm to 6am), or between weekday and weekend work, will also be a restricted variation.
Is there any exception for employers?
Yes, a narrow one. A dismissal will not be automatically unfair if the employer can show the business faced severe financial difficulties threatening it as a going concern, the variation was unavoidable, and it was aimed specifically at addressing those difficulties. This is intended to be read narrowly, not as a general escape route.
Why did the date change?
The original roadmap targeted October 2026. The revised roadmap of 3 February 2026 moved it to 1 January 2027, to align with the unfair dismissal qualifying-period reform. The government's timeline update of 22 October 2026 moved it again, to March 2027, and the consultation response published the same day aims for the supporting regulations to come into force alongside the protections in March 2027. Unfair dismissal reform stays on 1 January 2027.
What is happening to the code of practice?
On 22 October 2026 the government opened a consultation on a revised code of practice on dismissal and re-engagement, closing 17 December 2026. Its consultation response says the new code will come into effect in summer 2027. A failure to follow the code can raise the compensatory award in a relevant unfair dismissal case by up to 25%.
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Key figures
| Detail | Value |
|---|---|
| What the restriction does | It becomes automatically unfair to dismiss an employee because they refuse to agree to a restricted variation of their contract, or to dismiss and replace or re-engage them to achieve that varied term another way. Restricted variations are expected to cover pay, pensions, hours and holiday entitlement, with the detail set by regulations. (source) |
| Genuine business need exception | A dismissal will not be automatically unfair if the employer can show the business faced severe financial difficulties threatening it as a going concern, the variation was unavoidable, and it was aimed specifically at addressing those difficulties. This exception is intended to be construed narrowly. (source) |
| What the regulations will add (government decision, 22 October 2026) | Regulations will exclude expenses and benefits in kind from the pay restricted variation, except travel expenses (including mileage), accommodation expenses and long-term accommodation provided as a benefit in kind. Changes to share schemes are out of scope. Moving an employee between daytime and night-time work (night is 11pm to 6am), or between weekday and weekend work, will be a restricted variation; availability windows are not covered. The government aims for these regulations to come into force with the protections in March 2027. They have not yet been made. (source) |
| Commencement date | The government's implementation timeline, updated 22 October 2026, places fire-and-rehire protections in March 2027. That moves them back from January 2027, set by the revised roadmap of February 2026, which had itself moved them from an original October 2026 target. No commencement instrument has been made for the substantive provisions of section 28, so March 2027 remains a government target rather than a fixed legal date. (source) |
| No qualifying service required, compensation uncapped | Unlike ordinary unfair dismissal, no minimum length of service is needed to bring this claim, and compensation is uncapped (the general unfair dismissal compensatory cap is abolished from 1 January 2027 under section 25, before these protections start); reinstatement or re-engagement on the original terms may also be available. (source) |
| Statutory reference and current commencement status | Section 28 shows only partial commencement on legislation.gov.uk: subsections (1) to (3) and (6) in force 6 January 2026 for specified purposes via SI 2026/3, and subsections (1) to (3) further from 6 April 2026 via SI 2026/323. These are power-enabling commencements. The substantive protections in new sections 104I to 104K of the Employment Rights Act 1996 are not yet in force. (source) |
| Revised code of practice on dismissal and re-engagement | The government opened a consultation on a revised code of practice on 22 October 2026, closing 17 December 2026. Its fire and rehire consultation response says the new code will come into effect in summer 2027. Failure to follow the code can lead to an uplift of up to 25% to the compensatory award in relevant unfair dismissal cases. (source) |
Frequently asked questions
Is fire and rehire banned outright?
No. It restricts the practice rather than banning it entirely. A dismissal to force through a restricted contract variation becomes automatically unfair, but the narrow genuine business need exception still allows it in real financial distress.
Do I need two years' service to bring this claim?
No. This is one of the measures where no minimum length of service is required, unlike the general unfair dismissal qualifying period.
When exactly does this take effect?
The government's timeline, updated 22 October 2026, points to March 2027, moved from 1 January 2027. As at 28 October 2026 only the power to make implementing regulations was in force; the substantive protection still needs a commencement order, which will fix the exact day.
UK employment law is moving fast, and commencement dates have slipped before. When Teamed is your legal employer, we track every change and update your contracts, policies and payroll as the law lands, so you never have to read a roadmap to stay compliant.
