The Government has launched a consultation on how the fire and rehire protections under the Employment Rights Act 2025 should apply to employment expenses, benefits and shift patterns.
While narrow in scope, the consultation goes directly to how far employers will be able to enforce contractual change once the new regime is in force.
Fire and rehire changes under the ERA 2025
Fire and rehire remains a lawful, but high-risk, practice in limited circumstances, and the Government has long signalled its intention to restrict its use, with this consultation marking a key step in shaping that framework.
Under the Employment Rights Act 2025, dismissing an employee or replacing them in order to impose changes to protected contractual terms will amount to automatic unfair dismissal.
Automatic unfair dismissal removes the usual room for argument. The employer’s reasons, the quality of consultation and the commercial context do not form part of the legal test. If the change falls within a protected category, the dismissal fails.
The fire and rehire consultation is concerned with the boundaries of those protected categories.
Consultation launched
The Government is consulting on whether two areas should be treated as protected contractual terms for fire and rehire purposes:
a. Expenses and benefits: this includes contractual allowances, reimbursed expenses and benefits which form part of the employment contract rather than a discretionary policy framework.
b. Shift patterns: this includes changes to working patterns, shift structures and rotas where these are contractually fixed.
The aim is to prevent employees being forced into worse terms through dismissal, while still allowing businesses to adapt where necessary.
Fire and rehire is often discussed as a blunt tool. In practice, its value to employers has always been as a last-resort lever when agreement cannot be reached.
Once automatic unfair dismissal applies to a wider set of terms, that leverage disappears. Employers are left with a binary position: agreement or no change.
The wider the definition of protected terms, the more change management shifts away from legal risk balancing and towards upfront consent and structural planning.
The consultation closes at 11:59pm on 1 April 2026. Any changes resulting from it will require Parliamentary approval. The fire and rehire provisions themselves are not yet in force and will require commencement regulations.
Employers therefore remain subject to the current legal framework for now, but should plan on the basis that the future position will be materially tighter.
What employers should take from this consultation
This consultation is less about whether fire and rehire is acceptable, and more about how much contractual flexibility employers will retain.
The real risk lies in three areas. First, contractual design. Employers that have historically embedded benefits and working patterns into contracts rather than policies will find change harder to deliver under the new regime.
Second, decision sequencing. Once dismissal and re-engagement is no longer available for certain terms, pressure shifts to earlier stages of consultation. Waiting until agreement fails will be too late.
Third, governance. Automatic unfair dismissal leaves no margin for error. Employers will need stronger internal controls around who can approve changes, how consent is recorded and when legal advice is engaged.
For businesses that expect to restructure benefits, alter shift patterns or respond quickly to operational change, the consultation is an opportunity to assess exposure now, while the rules are still being shaped.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
