2nd July 2025
The term “fire and rehire” has made headlines in recent years, especially during times of economic uncertainty.
But what does it mean and is it even legal? In October 2024, the government introduced the Employment Rights Bill, which aimed to protect workers from being unfairly dismissed and rehired on worse terms. Sarah Everton, Head of Employment Law at Myers & Co, discusses what you need to know.
Fire and rehire is when an employer terminates an employee’s contract and offers them a new one, often with less favourable terms like reduced pay or hours.
It’s often used when businesses want to make changes to contracts but can’t get agreement from members of staff.
Under the new Employment Rights Bill, it is now automatically unfair to dismiss someone just to force new contract terms, unless the employer can prove they are facing unavoidable financial difficulties and have made genuine efforts to avoid dismissal.
This means employers must show they’ve explored all other options first, such as consulting with staff or negotiating changes.
Simply wanting to cut costs or streamline operations is no longer a good enough reason.
Alongside the Bill, a new statutory Code of Practice has been introduced. This sets out how employers should behave when trying to change employment terms.
If they don’t follow the Code, they could face increased compensation payouts of up to 25% in tribunal claims.
Importantly, the Code applies even if no one is dismissed. It’s about the process, not just the outcome.
Employers can still make changes to contracts, but they must:
If they follow these steps and can prove financial necessity, they can proceed cautiously.
The new fire and rehire restrictions are designed to protect employees from being forced into worse working conditions without proper justification.
It’s important to note that while the Employment Rights Bill has been introduced, the new restrictions on fire and rehire practices are not yet law. These measures are expected to come into force in October 2026, following a period of consultation and preparation.
If you’re an employee facing contract changes, it’s important to understand your rights. If you’re an employer, following the correct process early is now more important than ever.
If you’re dealing with fire and rehire issues, we can help. Whether you need advice on changing employment contracts or ensuring compliance with the new Code of Practice, our employment law team is here to support you.
For further information, please contact Sarah Everton head of the employment law team on 01782 577000 or email sarah.everton@myerssolicitors.co.uk . Myers & Co Solicitors has offices in Stoke-on-Trent, Staffordshire.
