Fire and rehire restrictions
From 1 January 2027, 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 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. From 1 January 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 from the same date. 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.
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, published 3 February 2026, pushed this to 1 January 2027 to align it with the unfair dismissal qualifying-period reform landing the same day.
Who handles this if you hire through Teamed?
Contract variations for your UK team, whether pay, hours or benefits, get handled through Teamed's employment relationship, which means any change goes through a compliant process from day one. You never have to weigh up whether a variation risks an automatic unfair dismissal claim: that's our job as the legal employer.
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) |
| Commencement date | The revised roadmap (3 February 2026) moved fire-and-rehire restrictions from the original October 2026 target to January 2027, aligning them with the unfair dismissal reforms. (source) |
| No qualifying service required, compensation uncapped | Unlike ordinary unfair dismissal, no minimum length of service is needed to bring this claim, and from 1 January 2027 compensation is uncapped (the general unfair dismissal compensatory cap is abolished the same date); reinstatement or re-engagement on the original terms may also be available. (source) |
| Statutory reference and current commencement status | Section 28, Employment Rights Act 2025, inserting sections 104I to 104K into the Employment Rights Act 1996. Only the power to make implementing regulations was brought into force on 6 January 2026 (SI 2026/3); the substantive protection is not yet in force as of 15 July 2026 and awaits a further commencement instrument expected to specify 1 January 2027, alongside a new statutory code of practice due in 2027. (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 roadmap points to 1 January 2027, though as of mid-2026 only the power to make implementing regulations was in force; the substantive protection itself awaits a further commencement order.
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.
