The UK’s Employment Rights Bill represents the most significant shift in workplace legislation in a generation.
Having now received Royal Assent, it is expected to take effect in stages throughout 2026, with far-reaching implications for how organisations manage, support, and restructure their workforces. Among the most debated changes are the restrictions on the practice known as “fire and rehire.” For HR professionals, this reform marks the beginning of a new era in employment relations that will demand careful preparation and a renewed focus on compliance and fairness..
Disclaimer: final details and timelines may change pending secondary legislation.
The government’s reform agenda is broad and ambitious. It introduces day-one unfair dismissal rights, new protections for zero-hours workers, changes to redundancy consultation requirements, and limits on when dismissal and re-engagement can be used. Each of these areas will require close attention from employers, but it is the fire and rehire restrictions that stand out for their potential to reshape how contractual changes are managed.
A new era for workplace rights
The Employment Rights Bill seeks to deliver stronger protection for workers while encouraging responsible employment practices. The government has made clear that it wants to prevent employers from using dismissal as a threat during contract negotiations. In recent years, the practice of firing and rehiring employees on less favourable terms has been criticised as undermining job security and damaging trust between employers and staff.
Under the new legislation, the use of dismissal and re-engagement will only be permitted in limited, clearly defined circumstances. Employers will have to demonstrate that all other options have been explored and that dismissal was truly a last resort. The reform introduces what is being referred to as a “restricted variation model,” which will significantly narrow the scope for contractual changes through dismissal.
This means that HR teams will need to rethink how they manage change. Historically, some employers have relied on flexibility clauses within contracts that allow them to alter certain terms. Going forward, these clauses will need to be drafted with extreme care to ensure they remain lawful and genuinely agreed by both parties. Employers who fail to prepare could find themselves unable to make legitimate business adjustments once the law takes effect.
The practical implications for HR
For HR professionals, these reforms will bring a host of practical challenges. Managing contract changes will become a more complex process requiring greater consultation, clearer communication, and meticulous record keeping. The ability to demonstrate that all alternatives have been considered will be critical, not only for compliance but also for maintaining employee confidence.
The new framework will also increase the importance of proactive workforce planning. Instead of relying on dismissal as a mechanism for change, employers will need to embed flexibility into their contracts well in advance. This preparation period, which runs through 2025 and into 2026, gives HR leaders a valuable window to review and, where necessary, renegotiate employment terms.
Managers will also need training on how to handle consultation processes appropriately. The new rules will require genuine dialogue with employees and trade unions where relevant, as well as thorough documentation of every step. In larger organisations, this could mean longer timelines for implementing change. For smaller businesses, it could increase the administrative burden and create new risks if procedures are not followed carefully.
The wider impact of the Employment Rights Bill
Although fire and rehire has captured headlines, it is only one part of a wider legislative overhaul. The introduction of day-one unfair dismissal rights will transform how employers manage new hires and probationary periods. Previously, employers had two years before most employees could bring an unfair dismissal claim. That grace period is being removed.
From the moment employment begins, employees will have protection against unfair dismissal, meaning that performance management, onboarding, and probationary reviews must be handled with consistency and care. Employers will need to ensure that managers understand how to follow fair processes, keep appropriate records, and provide transparent feedback.
Other elements of the Bill include adjustments to collective redundancy consultation rules, which may expand the definition of an “establishment.” This could mean that redundancies across multiple sites, when combined, trigger consultation obligations that previously did not apply. HR professionals should start reviewing how redundancies are managed to ensure they comply with any new definitions once implemented.
Zero-hours workers are also set to gain new rights, including the ability to request a more predictable working pattern. This will require employers to assess whether they can provide regular hours and to document decisions carefully. These developments reflect the government’s focus on creating a fairer and more transparent labour market.
Preparing during the 12-month transition window
Employers currently have around a year to prepare before the fire and rehire restrictions take effect in October 2026. This preparation period is an opportunity to review existing contracts, ensure flexibility clauses are lawful, and make any necessary changes while still permitted to do so.
HR teams should begin by auditing all contracts of employment to identify where flexibility might be required in the future. This could relate to working hours, location, job duties, or remuneration structures. Any revisions should be communicated clearly, with an emphasis on mutual agreement and fairness. Employers should also review their policies and handbooks to ensure that their procedures reflect the upcoming changes.
It is equally important to review consultation frameworks. Once the new rules are in place, employers will need to demonstrate that they have engaged meaningfully with employees before making any contractual changes. Having a structured consultation process ready in advance will make future transitions far smoother and legally sound.
Anticipating new sources of dispute
Once dismissal and re-engagement become more heavily restricted, disputes may arise when employers and employees cannot agree on proposed contractual changes. Without the ability to rely on dismissal as a mechanism for resolution, HR professionals will need to focus on mediation and negotiation.
In such situations, communication will be key. HR leaders should encourage open dialogue between managers and employees to avoid stalemates. Exploring alternative incentives or phased approaches may also help in securing agreement. However, all discussions should be carefully documented to demonstrate transparency and reasonableness.
Employers who fail to engage constructively risk facing legal challenges, reputational damage, or even industrial action. The emphasis should always be on collaboration rather than coercion.
Building capability through training and awareness
Training will be essential to ensure that line managers, HR practitioners, and senior leaders understand the new legal landscape. Those involved in recruitment, performance management, and workforce planning must be aware of how the reforms affect their roles.
Internal communication will also play a vital part. Employees should be informed of upcoming changes and reassured that their rights will be respected. Proactive communication helps to build trust and can prevent unnecessary anxiety or speculation. Transparency at every stage will make it easier for businesses to maintain engagement while adapting to new legal requirements.
Looking ahead to a more balanced future
The reforms represent a significant shift towards strengthening employee rights while promoting fairness and accountability in the workplace. For employers, they present both challenges and opportunities. On one hand, the restrictions may reduce flexibility in managing business change. On the other, they encourage a more structured, transparent, and ethical approach to employee relations.
For HR professionals, the key will be preparation. Those who take the time now to review contracts, train managers, and strengthen communication processes will be best placed to navigate the changes successfully. The next 12 months should be seen as a period of investment in good practice rather than a countdown to compliance.
How HRM Derbyshire Peaks can help
At HRM Derbyshire Peaks, we support UK businesses through every stage of legislative change. Our role is to help you understand the implications of new employment law, review your contracts and procedures, and build a compliant yet flexible people strategy that works for your organisation.
Whether you need assistance drafting new contracts, training your management team, or preparing communication plans for your employees, we provide clear, practical, and tailored HR advice. By acting early, you can ensure that your organisation remains compliant, fair, and resilient as the new reforms take effect.
Final thoughts
The UK’s fire and rehire reforms mark a defining moment for employment relations. The changes will require businesses to rethink how they manage flexibility, negotiate with employees, and implement change. For HR teams, this is an opportunity to lead with integrity and to strengthen trust between employers and their people.
Preparing now will not only protect your organisation legally but also enhance its reputation as a fair and responsible employer. With thoughtful planning, open communication, and professional HR support, businesses can adapt confidently to this new era of employment law.
If you would like expert guidance on preparing your organisation for the upcoming fire and rehire reforms or the wider Employment Rights Bill, contact HRM Derbyshire Peaks today for tailored HR support.