Fire and rehire rules delayed to March 2027: what to do now

The new fire and rehire protections in the Employment Rights Act 2025 will now start in March 2027, two months later than planned. The government confirmed the delay in its timeline update of 22 October 2026. Until then, the current law and the 2024 Code of Practice still apply, so employers have a short window to plan any contract changes properly.

What has been delayed?

The ban on most fire and rehire practices has moved from January 2027 to March 2027. The protections were first due in October 2026, then moved to January 2027, and have now moved again.

The government’s timeline update, last updated on 5 November 2026, lists fire and rehire under March 2027. It does not give a reason for the delay or an exact day. Some law firms report 1 March 2027; treat that as unconfirmed until the commencement regulations are made.

What will the rules do?

From March 2027, a dismissal will be automatically unfair if the reason is that the employee refused a “restricted variation” to their contract. It will also be automatically unfair to dismiss someone and re-engage them, or replace them, to make that change.

Automatic unfair dismissal does not need a qualifying period of service. That means the rules protect new starters too.

Which contract changes are restricted?

The Act lists the core changes, and the government response of 22 October 2026 adds more through regulations.

Restricted variations include:

• reductions in pay
• changes to pensions
• changes to total working hours
• reductions in holiday entitlement
• certain travel expenses (including mileage) and accommodation
• moving workers from day to night shifts, or from weekday to weekend shifts, where they did not do that work before

Not restricted:

• most other expenses and benefits in kind
• changes to share schemes
• smaller shift changes, such as starting a daytime shift a few hours later

Smaller changes still fall under ordinary unfair dismissal law. Tribunals will look at how fairly you consulted. The government says the regulations on expenses and shift patterns will be made “when parliamentary time allows”, with the aim of having them in force alongside the protections.

What is the financial difficulties exemption?

It is the only way to dismiss fairly for refusing a restricted variation. The employer must show it faced financial difficulties that affected, or were very likely to affect, its ability to carry on as a going concern, and that it could not reasonably have avoided the change.

Public bodies and local authorities have their own versions of the test. Commentators expect the bar to be close to insolvency. Even where it applies, the tribunal will look at whether the process was fair.

What applies until March 2027?

Until the protections start, the current law applies. You can still dismiss and re-engage, but ordinary unfair dismissal rules apply and the 2024 statutory Code of Practice on dismissal and re-engagement is in force.

Failing to follow the Code can increase compensation by up to 25%. The 2024 Code will be withdrawn in March 2027, but the revised Code is not expected until summer 2027, so there may be a gap.

Which applies to you?

• If you plan to cut pay, hours or holiday: finish consultation and agreement well before March 2027, or plan for the new rules.
• If you rely on a flexibility clause: take advice. Commentators warn that adding a new unilateral variation clause after the rules start may itself be restricted.
• If you are buying a business under TUPE: build the rules into due diligence, as harmonising terms by dismissal will be very hard.
• If the business is in real financial distress: document the evidence now. The exemption needs proof about going concern status.
• If the change is minor: consult properly. Ordinary unfair dismissal rules still apply, and from 1 January 2027 they cover staff with six months’ service.

What to do now

1. Map your contract terms. Include pay, pension, hours, holiday, expenses and shift patterns, and terms that have become contractual through custom and practice.
2. List any planned changes for 2027. Decide whether each one is a restricted variation.
3. Consult early. Share information, give time for discussion and record the alternatives you looked at.
4. Model the cost. Use our salary sacrifice calculator or employer NI calculator to test alternatives to pay cuts.
5. Respond to the consultation. Comments on the revised Code are due by 11:59pm on 17 December 2026 by email to fireandrehire@businessandtrade.gov.uk or online.
6. Follow the wider timeline. See what changes for employers and when and our employment news hub.

Directors weighing up redundancies should also read our guide to directors’ responsibilities, as the financial difficulties test relies on evidence about going concern status.

Frequently asked questions

When do the fire and rehire rules start?

March 2027. The government moved them from January 2027 in its timeline update of 22 October 2026. The exact day has not been confirmed on GOV.UK.

Can I still use fire and rehire before March 2027?

The current law applies until then, including ordinary unfair dismissal rules and the 2024 Code of Practice. Failing to follow the Code can increase awards by up to 25%.

What is a restricted variation?

A change to a core term such as pay, pensions, total hours or holiday, plus certain travel and accommodation expenses and some shift pattern changes added by regulations.

Is there any exception to the new rules?

Yes, a narrow financial difficulties exemption. The employer must show the change was needed because financial difficulties affected, or were very likely to affect, its ability to carry on as a going concern.

When will the new Code of Practice apply?

The revised Code is expected in summer 2027. Its consultation closes at 11:59pm on 17 December 2026.