The Effective End of Fire and Rehire: What to Do Instead

Fire and rehire — dismissing employees and offering to re-engage them on different, usually less favourable, terms — has been a controversial but legally available option for employers who needed to change employment conditions.

The Employment Rights Act effectively closes that door.

Under the new legislation, fire and rehire will only be permissible in the narrowest of circumstances: where the employer can demonstrate that the variation was genuinely necessary to prevent a business failure, and where they've exhausted all alternatives through proper consultation.

In practice, for most businesses and most situations, fire and rehire is no longer a viable option.

Why This Change Matters

Even if you've never used fire and rehire — and most small businesses haven't — this change is worth understanding because it shifts the whole framework for how you handle employment term changes.

Businesses that have thought of it as a last resort now need to plan for a world where that last resort isn't available. And that means having better processes in place before you ever reach a point of crisis.

When Would You Need to Change Someone's Terms?

Before getting to the 'what instead,' it's worth being clear on the situations where changing employment terms becomes necessary:

• A role changes significantly — responsibilities, hours, or location

• Business restructuring requires a reorganisation of how work is structured

• Financial pressures require changes to pay, benefits, or working patterns

• A TUPE transfer results in a need to harmonise terms across a merged workforce

These situations happen in small businesses regularly. The ERA change doesn't make them impossible to navigate — but it does require a proper process.

What to Do Instead: The Consultation Route

The right approach to changing employment terms has always been consultation. The ERA simply makes it compulsory in a much stronger sense.

A proper consultation process looks like this:

Start early. Don't wait until a change is urgent. Consultation takes time — and rushing it is one of the most common reasons it goes wrong.

Be transparent about the reason. Employees are far more likely to accept a change they understand. Explain the business rationale clearly and honestly.

Genuinely listen. Consultation isn't a notification exercise. Employees should have a real opportunity to raise concerns, suggest alternatives, and have those alternatives considered.

Document everything. Keep a record of all consultation meetings, written communications, and responses. If this ever reaches a tribunal, the quality of your process will be scrutinised.

Seek agreement. The ideal outcome of any consultation is a signed variation of contract — where the employee explicitly agrees to the change in writing. This is clean, clear, and protected.

What If Agreement Can't Be Reached?

This is where it gets more complex. If you've gone through a genuine consultation process and an employee won't agree to a necessary change, you may still have options — but they need to be handled carefully and with proper HR and legal guidance.

The key point is that 'we can't reach agreement' is not the starting point for fire and rehire. Under the ERA, it's a situation that requires escalation to proper professional advice — not a unilateral decision to dismiss and re-engage.

Getting Ahead of This

The businesses best placed to navigate the end of fire and rehire are those with strong employment documentation, a culture of open communication, and a habit of addressing people issues proactively rather than reactively.

If you're anticipating any changes to your business structure, working practices, or employment terms in the next 12–24 months, now is a good time to think through how those changes will need to be managed — and to get the right support in place before you need it.

Want help with this?

If you'd like support preparing for the Employment Rights Act, Clear People offers practical, plain-English HR guidance for businesses across the South East and beyond.

We work with SME owners and in-house HR teams — whichever camp you're in, we can help you get ahead of this.

Get in touch for a no-obligation conversation