Fire and Rehire

4th June 2025

Admin

Let’s talk about one of the most controversial employment practices.

Some employers have used ‘fire and rehire’ tactics to cut costs during times of financial difficulty. However, with the introduction of the Employment Rights Bill in October 2024, and a renewed focus by the Labour Government on workers’ rights – will this change?

What is fire and rehire?

‘Fire and rehire’ refers to the practice where an employer dismisses an employee, only to re-engage them on less favourable terms such as: reduced pay, longer hours, and/or fewer benefits. An employee may effectively be pressured into accepting these changes under the threat of losing their job.

This practice surged during the COVID-19 pandemic , as some Companies needed urgent measures to cut costs. It sparked widespread criticism from many employees, trade unions, and members of the public, who highlighted the imbalance of power and the harm to workers’ morale, wellbeing, and job security.

Is it against the law?

While not technically illegal under current law, ‘fire and rehire’ has always been a tricky area. Before dismissing staff with the intention of offering re-engagement on different contractual terms, employers must have a clear business case and follow a fair process, including making reasonable attempts to reach an agreement through a full consultation.

Why is the law changing

The Employment Rights Bill is aimed at modernising employment law and strengthening workers’ rights across the UK. As such, it seeks to provide protection for employees who may be pressured into signing new but less favourable terms through ‘fire and rehire’ processes.

For more information on the Bill, see our blog on Employment Rights Bill: What We Know So Far.

What are the proposed reforms?

The proposed reforms related to fire and rehire practices include:

Automatic unfair dismissal: If an employee is either: dismissed solely for refusing to accept a detrimental change to their contract, or, dismissed and re-engaged on varied contractual terms, the dismissal could be considered automatically unfair (regardless of how long they’ve worked for the employer).

Mandatory consultation: Employers will be legally required to engage in genuine and meaningful consultation with employees (their representatives, or trade union) before proposing contractual changes.

What does this mean for employers?

This is a clear message from the Government that outdated or aggressive contract renegotiation tactics are no longer acceptable. Poorly handled fire and rehire practices can expose employers to significant legal and reputational risks, such as:

Employment Tribunal claims (including claims for automatic unfair dismissal)

Injunctions or enforcement notices

Union action or industrial disputes

Loss of staff trust, productivity, and retention

What should employers do now?

Ensure their existing employment contracts, policies, and procedures are compliant and up to date.

Ensure any plans to propose changes to staff terms of employment include meaningful consultation and reasonable attempts to reach an agreement through this.

Train line managers, leaders, and HR teams on legal obligations and handling difficult conversations.

What does this mean for employees?

If you’re an employee who has been threatened with dismissal, or actually dismissed, for not accepting new terms, this Bill may give you stronger legal footing for a settled exit, and/or making a claim within the Employment Tribunal when it comes into force.

Key protections include:

Refusing a contractual change cannot be used as a fair reason for dismissal

You may have grounds for automatic unfair dismissal, despite your length of service

Ensuring your voice is heard and protected, as you have the right to challenge any changes

How can Thrive Law help?

Whether you’re an employer trying to navigate the changes, or an employee concerned about your rights, Thrive Law is here to support you with expert, people-first advice.

For Employers: