UK employers need to adapt to impending adjustments in the Employment Rights Bill's 'fire and rehire' policies

The UK government is set to implement the Employment Rights Bill, a new piece of legislation aimed at preventing companies from firing staff and rehiring them on different terms. The bill, which will be debated in parliament when it returns from summer recess in early September, is set to come into effect from October 2026.

The new laws, affecting employees across the United Kingdom, particularly those in industries such as retail, hospitality, and manufacturing, will stop companies from trying to rehire workers on reduced terms. Under the new bill, it will be automatically unfair to dismiss and offer re-engagement on new terms that include detrimental changes to pay, pensions, hours, shifts, and holidays.

Gillian Harrington, an employment law expert at Pinsent Masons, emphasised the importance of building flexibility into contracts for employers across all sectors. She advised companies to review their current variation clauses to ensure they will still be workable once the ERB's provisions take effect.

Similarly, Craig Patterson, a Belfast-based employment law expert at Pinsent Masons, advised employers with operations in Northern Ireland to review their variation clauses on the basis of intended alignment with the approach taken in Great Britain. There will be specific changes for the public sector under the new Employment Rights Bill.

The new legislation aims to allow businesses to remain viable while preventing them from rehiring workers on reduced terms. Automatic unfair dismissal will not be triggered where changes are minor, "routine and non-detrimental", or the change proposed relates to the place of work. However, seeking to impose a clause which enables employers to vary the contract in these areas will be a restricted variation in itself.

The Employment Rights Bill covers various aspects of employment law, including Employment & Reward, Commercial, Corporate, Employment Status, Industrial Relations, Professional & Public Services, Restraint of trade & contracts, and Restructuring. Many employers have a variation clause in place, but they should check now whether it will still be workable once the ERB's provisions take effect.

The government has previously set out a roadmap for the bill's phased implementation, and it aims to get the Employment Rights Bill passed before the session ends in mid-September. The new laws will also be enacted separately in Northern Ireland. The UK government plans to implement new legislation to ensure businesses can operate effectively while protecting the rights of their employees.

UK employers need to adapt to impending adjustments in the Employment Rights Bill's 'fire and rehire' policies