🔥 Major Legal Shift: Tighter Restrictions on 'Fire and Rehire' 🔥
- lansburyservices
- Oct 17
- 2 min read
What’s it all about?
The legal landscape governing contract changes has decisively shifted against the practice of 'fire and rehire,' making it significantly riskier for employers.
What happened?
New legal measures and a statutory Code of Practice are now in effect, substantially raising the hurdle for companies attempting to dismiss employees for refusing new terms and then immediately offering re-engagement on worse conditions. This legislation effectively restricts the use of 'fire and rehire' to extremely limited circumstances.
What does this mean for you?
What this means for employers is that the legal and reputational costs associated with this practice are now prohibitively high. It is no longer a viable, tactical option for forcing through contractual changes. Businesses must now demonstrate that they have truly exhausted all alternatives and engaged in genuine, meaningful consultation with staff and/or union representatives regarding any proposed changes to terms and conditions. Failure to adhere to the new Code of Practice can lead to employment tribunals applying a 25% uplift to any resulting protective or compensation awards, making non-compliance financially devastating.
Our Advice: HR and leadership must immediately recalibrate their approach to contractual changes.
Action 1: Review and Update Consultation Processes. Ensure your change management and consultation policies prioritize early dialogue and a demonstrable effort to seek agreement, making 'fire and rehire' a true last resort, not a first threat.
Action 2: Enhance Legal Oversight. Mandate that HR and legal teams are involved from the very outset of any proposal to change employee terms to ensure all statutory requirements are met and the severe risks of non-compliance are mitigated.
Action 3: Train Managers. Train line managers and senior leaders on the new Code to ensure they understand the difference between meaningful consultation and tokenistic communication, thereby protecting the business from enhanced penalties.
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