Fire and rehire
From January 2027, dismissing someone because they won’t accept a change to their pay, hours, leave or pension is expected to become automatically unfair, unless your business is in serious financial difficulty.
- When it starts
- Expected from January 2027
- Who it affects
- Employers changing staff contracts
- Status
- Expected, not yet confirmed
What’s changing
Fire and rehire means dismissing staff who won’t agree to a change to their contract, then taking them back, or taking on someone else, on the new terms.
The government expects that from January 2027, it will be automatically unfair to dismiss someone because they won’t agree to:
- a cut to their pay
- a change to their total hours
- a cut to their leave
- a change to their pension
- certain changes to shift patterns, which the government is setting out in regulations
Automatically unfair means the dismissal is unfair if that’s the main reason for it. It’s also automatically unfair to dismiss someone so you can replace them with someone else on the new terms.
The exception. You must show that the business had financial difficulties that were affecting, or were soon likely to affect, its ability to carry on; that the change was meant to eliminate, prevent or significantly reduce them; and that you couldn’t reasonably have avoided making it. Even then, a tribunal still decides whether the dismissal was fair, looking at whether you consulted the employee, or their union or representatives, and what you offered in return.
Other changes, such as to where someone works or to their role, aren’t automatically unfair, but a tribunal will look at the same things: consultation, and what you offered.
What it means for a small employer
Change contracts only by agreement. If someone won’t agree to a change to their pay, hours, leave or pension, dismissing them to force it through is expected to be automatically unfair, unless the business is in serious financial difficulty.
For any contract change, how you consulted and what you offered in return matter, so keep a record of both.
An example, with made-up names. Lena owns a salon. Takings are down, and she wants to cut 2 stylists’ hours from 35 to 30 a week. One agrees; the other doesn’t. From January 2027, dismissing the stylist who refuses is expected to be automatically unfair, unless Lena can show the salon was in financial difficulty that threatened its ability to carry on, that the change was to deal with it, and that she couldn’t reasonably avoid it. Even then, the tribunal would look at how she consulted and what she offered in return.
What to do now
-
Propose changes in writing
Explain the change and the business reason for it, and give staff time to consider it.
-
Consult
Meet the people affected, listen, and keep a record of what was said.
-
Think about what you can offer
A tribunal looks at what was offered in return for a change.
-
Get the new terms signed
A signed agreement to the new terms is your evidence that they agreed.
-
Don’t dismiss to force a change
If someone won’t agree, get advice before you take any step that could end their employment.
How Maravier handles it
- Contract changes run step by step: a proposal letter, a record of the consultation, and a signed agreement to the new terms.
- Mirith, our assistant, drafts the letters, and your HR expert signs off any change that cuts pay, hours or rights before anything reaches your staff.
- The app stops before any step that could become dismissal and re-hire.
You make the final call; we do everything else. The law keeps decisions about your staff with you, the employer, so you decide and we do the work around it.
Sources
- Fire and rehire factsheet, gov.uk (PDF)
- Employment Rights Act 2025, Acas
- Plan to Make Work Pay and Employment Rights Act: timeline update, gov.uk
- Unfair dismissal, Acas
Checked against the law on 8 October 2026. General information, not legal advice.
Get the free 1 January 2027 checklist.
The 10 things every employer in England, Scotland and Wales should have in place, on 2 pages. Emailed to you, free.
Thanks. We’ll email it to you as soon as it’s ready.
Rather have it done for you? Reserve your founding price. It’s refundable until launch.