Employment Rights Bill
Fire and rehire rules
What you need to know
If you’ve ever needed to change your employment terms to keep your business viable, you’ll know it’s one of the most stressful situations you can face as an employer. The Employment Rights Bill is about to make this process significantly more complex.
Currently, if an employee refuses to accept necessary contract changes, you can dismiss them and offer re-engagement on new terms – commonly known as ‘fire and rehire’.
It’s never ideal. But sometimes, it’s been the only option to avoid redundancies or business closure.
The Employment Rights Bill will make dismissing employees for refusing contract changes automatically unfair, except in very limited circumstances. For small businesses that need flexibility to adapt and survive, it represents a fundamental shift in how you’ll need to manage change.
With implementation expected in 2026, now’s the time to understand these changes and adapt your approach.
Understanding the new ‘fire and rehire’ rules
Under current law, you can dismiss employees who refuse to agree to contract changes, provided you follow a fair process. This might involve changes to pay, hours, benefits or working patterns. While not without risk, it’s been a legal option when your business needs require it.
The Employment Rights Bill will make these dismissals automatically unfair unless you can prove you genuinely had no alternative. This is a high bar to meet, much higher than the current requirement to show a fair reason for dismissal.
‘No alternative’ means you’ll need to demonstrate that without the changes, jobs would be lost through redundancy, or the business would face closure. It won’t be enough to show the changes would improve efficiency or profitability.
The rules will apply to all your employees from day one of employment. There’s no qualifying period. This means even your newest team members will have protection against ‘fire and rehire’.
In practice, this could mean that if you need to change shift patterns to meet customer demand, reduce benefits to control costs, or alter job roles to improve efficiency, you’ll need employee agreement. If they refuse, your options will be severely limited.
What this means for your business
The practical impact of these new rules can’t be overstated. Many routine contract changes that you might previously have pushed through will become extremely difficult to implement without employee consent.
The financial implications could also be significant. If you can’t change contracts to reduce costs during tough times, you might face harder choices, like making redundancies instead. The flexibility that’s helped many small businesses survive economic downturns will be significantly reduced.
You’ll also need to become much better at consultation and negotiation. Getting employee buy-in will be essential, not optional. It means spending more time on communication, potentially higher costs for perks or compensation, and accepting that some necessary changes might not happen.
The changes also interact with other employment rights. Day-one unfair dismissal rights mean managing underperformance or restructuring will require much more careful planning.
How to prepare for the changes
Preparing for these restrictions requires a shift in approach and some practical steps. The key is building flexibility and trust into your employment relationships now, before the new rules constrain your options. Here’s what you should focus on:
- Review your current processes – Document how you handle contract changes now and identify where they’ll need updating. If you don’t have a formal consultation procedure, create one.
- Audit your existing contracts – Check for flexibility clauses that allow reasonable changes without individual consent. Consider adding appropriate provisions to contracts for new starters.
- Develop your consultation skills – Train yourself and your managers in how to present the changes positively, handle objections and find win-win solutions. The better you become at getting genuine agreement, the less these rules will restrict you.
- Create template documents – Prepare standard forms for proposing changes, recording consultations and documenting the business rationale. Robust paperwork will be essential to show you’ve explored all alternatives.
- Shift your mindset – Start viewing contract changes as negotiations, not impositions. Build positive employee relations now. Staff who trust you are more likely to accept changes.
- Consider the timing – While we don’t advocate rushing changes through, if restructuring is genuinely necessary for your business, it may be easier to implement before the new rules take effect.
How Hill HR can support you
As your outsourced HR partner, we’ll review your current contracts and consultation procedures, identifying gaps and areas for improvement. Our team can draft new template documents that meet the upcoming requirements while protecting your business flexibility where possible.
We provide practical training on consultation and negotiation techniques, helping you and your managers build the skills needed for this new environment. We’ll also create specific protocols for different types of contract changes you might need to make.
When you do need to make changes, we’ll guide you through the process, ensuring you meet the new legal requirements and document everything properly. If disputes arise, we’ll help you resolve them before they escalate.
Our support gives you confidence that you’re handling changes correctly, reducing the risk of costly tribunal claims while maintaining the flexibility your business needs to thrive.
Get ahead of the game
These changes will fundamentally alter how you manage your workforce. The businesses that prepare now will find ways to maintain flexibility within the new framework. Those that don’t may find themselves stuck with outdated terms they can’t afford.
Don’t wait until 2026 to start thinking about this. Get your approach right now, and you’ll be ready when the new rules arrive. Contact us today to discuss how we can help you prepare for these changes.
