- with readers working within the Insurance industries
- with Senior Company Executives, HR and Inhouse Counsel
Government publishes new implementation timeline and launches consultation on dismissal and re-engagement "restricted variations."
The Government has updated its implementation timeline for legislative changes under the new Employment Rights Act 2025. The new timeline is summarised in its Plan to Make Work Pay and Employment Rights Act: timeline update - GOV.UK.
In a key change, there has been a postponement of the date for bringing in protections for employees who are dismissed for refusing a change to their employment contracts. The new rules will come into effect in January 2027, rather than October 2026 as previously indicated. The new rules will mean it is automatically unfair to dismiss an employee for this reason where the contractual change is listed as a "restricted variation" unless, as the Government puts it, the employer is "in severe financial difficulty and has no reasonable alternative".
What are "restricted variations" in the new fire and rehire protections?
The changes to employment contracts which are restricted in the new law include:
- Reductions to pay (including any sum payable to an employee in connection with employment);
- Changes to measures and targets where these are linked to pay;
- Changes to pensions or pension schemes;
- Changes to the number hours an employee is required to work;
- Changes to the timing or duration of shifts (subject to regulations which are yet to be made);
- Reduction to leave entitlement;
- Seeking to include in the contract a term enabling the employer to make any variation with regard to any of the above without the employee's agreement; and
- Other changes specified in regulations.
Consultation launched on 4 February 2026
The Government is now consulting until 1 April 2026 on two aspects of these "restricted variations" before making regulations.
Changes to terms on expenses and benefits in kind
The first of these is the kind of employment expenses and benefits in kind which should be excluded from the list of restricted variations, and which would otherwise be included as a sum payable to an employee in connection with their employment.
The consultation asks for responses on whether all contractual changes relating to expenses and benefit in kind payments should be excluded, such that a change to these terms would not be automatically unfair (although it might still be ordinarily unfair). This is the approach currently favoured by the Government.
It also asks for responses to the proposal that changes to expenses and benefits in kind would be excluded apart from changes to share schemes, travel expenses and accommodation which would be included as restricted variations.
Changes to the timing and duration of shifts
The second part of the consultation is on the changes to the timing or duration of a shift which will be considered a restricted variation under the new rules.
The Government is minded to include as restricted variations only those changes to shifts which would mean a change from day to night working, or from weekday to weekend working, given the significant impact of such changes on the individual.
It is also seeking views on whether other types of changes to shifts should be included as restricted variations, and on the option of changes to shifts not being listed as restricted variations at all.
How should employers prepare for the new fire and rehire protections?
The process of changing terms by dismissal and re-engagement is already a high-risk approach and one which should only be taken as a last resort after following the steps set out in the Acas Code of Practice on Dismissal and Re-engagement.
Employers who are considering making changes to terms ahead of the new law coming into force should seek legal advice at an early stage. There are significant financial risks in getting the process wrong.
Alongside the steps in the Acas Code, employers should take into account in their timelines any requirement to consult or negotiate with employee representatives to seek collective agreement before making offers of terms to individuals, particularly where they are members of a recognised trade union. They should also be aware of the need to consult collectively on the changes under the collective redundancy consultation rules where these apply.
Where changes listed as restricted variations may be needed after the new law has come into force, employers should, amongst other things, ensure that they can clearly evidence their financial difficulties, and the business need to make the changes in question in order to eliminate, prevent, significantly reduce, or significantly mitigate the effect of those financial difficulties.
Wrigleys have considerable experience of guiding employers through change of terms processes, including in the context of employers with unionised workforces. Do get in touch if we can be of assistance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
