Employers who dismiss and re-engage staff on worse terms — a practice known as "fire and rehire" — will find the tactic automatically unfair in most cases from October 2026, under provisions of the Employment Rights Act 2025 confirmed by multiple employment law firms and the UK government.
The change applies specifically to dismissals used to impose "restricted variations" — defined as changes to pay, pensions, working hours, shift patterns and statutory time off. Whether other terms, such as benefits and expenses, will also be covered was the subject of a government consultation that closed on 1 April 2026; the outcome will be set out in further regulations.
A narrow exception applies where an employer can show that financial difficulties were affecting, or were likely to affect, its ability to continue operating as a going concern, and that the variation could not reasonably have been avoided. Even where this exception applies, the dismissal remains subject to the ordinary test of fairness, including consultation carried out and what was offered to the employee in exchange for the change. Dismissals relating to terms outside the restricted list, such as place of work, are not automatically unfair but will still be assessed under existing unfair dismissal principles.
The same October 2026 tranche strengthens the employer's duty to prevent sexual harassment, raising the standard from taking "reasonable steps" to "all reasonable steps." This is accompanied by a new duty covering harassment by third parties — including customers, contractors, clients and members of the public — related to any protected characteristic. Third-party harassment liability was removed from UK law in 2013; its reintroduction restores protections last in place over a decade ago. Guidance on what constitutes "all reasonable steps" is not expected until 2027.
Both measures follow the day-one rights introduced in April 2026 and precede the unfair dismissal changes due in January 2027, forming part of the Act's staged implementation through 2026 and 2027.