As of 2026, the process of firing and rehiring an employee (typically so they are on less favourable terms) is not illegal. However, due to the Employment Rights Act 2025 from 2027 the Act will restrict employers.
The Act reached Royal Assent in December 2025 and provides employees and workers with greater workplace protections. From January 1st 2027, the Act will restrict employers’ ability to use fire and rehire as new laws will mean such dismissals may be treated as automatically unfair. That is unless the employer can show:
- Evidence of financial difficulties affecting viability
- Changes made were to reduce or mitigate the effects of financial difficulties
- Needing to change a contractual term was unavoidable
To ensure employers avoid the likes of unfair dismissal claims, or potential employment tribunals, they should ensure a fair process based on open conversations between the employer and employee(s).
