Fire and Rehire: New employment law changes you need to know

Fire and rehire is the practice of dismissing employees and then offering to re-engage them on new contractual terms. These terms are often less favourable and imposed without genuine employee agreement, which has made the practice highly controversial.

At present, fire and rehire is legal in the UK if handled correctly. However, new legislation under the Employment Rights Bill (expected in October 2025) will make it automatically unfair to dismiss an employee for refusing to accept new terms or for being dismissed and re-engaged on revised terms.

The government is acting to prevent employers from using fire and rehire to force through changes without consultation. The aim is to protect employees from being pressured into worse conditions and to encourage fairer consultation and negotiation.

Employers risk unfair dismissal claims, reputational damage, lower employee morale, and disengagement. The financial and cultural costs of mismanaging fire and rehire can far outweigh the short-term benefits.

Employers should consult openly with employees about proposed changes, explain the business reasons, and seek genuine agreement. Exploring alternatives, such as voluntary changes or phased adjustments, reduces legal and reputational risks.

HR outsourcing gives SMEs access to experts who can guide them through workforce changes lawfully and fairly. From reviewing contracts to planning consultation processes, outsourced HR ensures compliance and helps maintain positive employee relations.