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The passing of the Employment Rights Bill and the emergence of the Employment Rights Act 2025 (ERA 2025) have kicked off a tsunami of government consultations.
When do the changes become law?
On 3 February 2026 the government confirmed that the new fire and rehire laws will come into effect from January 2027.
The government consultation
On 4 February 2026 the government published its consultation about the fire and rehire provisions of ERA 2025. The consultation seeks views on which contractual variations should constitute “restricted variations” for the purposes of the new right not to be automatically dismissed for failing to agree a restricted variation.
New section 28 automatically unfair dismissal right
Section 28 of ERA 2025 will insert a new section 104I into ERA 1996 (Employment Rights Act 1996) with the effect that an employee will be automatically unfairly dismissed where the reason or principal reason for the dismissal is one of the following:
- The employer tried to impose a restriction variation and the employee did not agree.
- The employer tried to make more than one variation and the employee did not agree to several variations including at least one restricted variation.
- The employee was dismissed to allow the employer to employ another person, or to re-engage the employee under a varied contract to carry out the same (or substantially the same) duties where one or more of the changes is a restricted variation.
Note however that there will be an exemption for employers in significant financial difficulties (section 104I(8) ERA 1996).
What is a restricted variation?
A restricted variation is any of the following:
- A reduction or removal of an entitlement to any sum payable in connection with employment (s.104I(5)(a)).
- A variation of the timing or duration of a shift that meets conditions to be specified in regulations (s.104I(5)(e)).
The Secretary of State also has the power to add new types of restricted variations.
Regulations may also be made that matters relating to expenses and benefits in kind may not constitute restricted variations.
What is the desired aim of the consultation?
The aim of the consultation is to seek to balance the protection of employees from the imposition of significant detrimental changes with the legitimate need of businesses to make decisions required to adapt their business to changing circumstances.
The underlying policy intent is to ensure that employers cannot unilaterally impose less favourable contractual terms other than in circumstances where significant financial difficulties are in play.
The government is inclined to make regulations to the effect that all expenses and benefits in kind are excluded from being restricted variations but asks whether that should carve out certain types of share schemes, travel expenses and accommodation.
The shift patterns that will constitute restricted variations are also under discussion via the consultation process including the giving of reasonable notice. The government suggests that shift changes from day to night (and vice versa) or from weekday to weekend working or vice versa) should be restricted variations. They are open to consider however whether no types of shift patterns should be within scope of the restricted variation.
Have your say…
The consultation closes on 1 April 2025. Any regulations emanating from the consultation will need to be approved by Parliament. Watch this space…
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.
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