UK’s ‘fire and rehire’ reforms pose new challenges for HR

The Employment Rights Bill is edging closer to becoming law. The government’s roadmap shows  Royal Assent is expected this autumn, with the numerous reforms to be phased in – reforms that include the ‘fire and rehire’ restrictions which we talked about last week due in October 2026. That change is a big one and will present HR teams will a number of challenges. We’ll hear again from Gillian Harrington who is already helping a number of clients to prepare for that while there is still time. 

A reminder. The Bill represents the most sweeping overhaul of workplace rights in a generation. It includes new day-one unfair dismissal rights, new protections for zero-hours workers, changes to collective redundancy consultation and new limits on dismissal and re-engagement, better known as fire and rehire. The Lords tried to soften those fire and rehire reforms by carving out exceptions and narrowing the rules, but MPs rejected that. It means the so-called ‘restricted variation model’ still stands, and employers have a window of around 12 months to build lawful flexibility into contracts before the restrictions bite.

And it isn’t just fire and rehire that HR needs to prepare for. Once the Bill comes into force, employers will also face challenges around managing probation and performance, navigating changes to redundancy consultation rules, and responding to zero-hours staff requesting fixed patterns. Add to that industry-specific concerns – such as in the energy sector where a mobile workforce heightens the risks – and you can see why HR teams have a pivotal role in helping their organisations plan now.

But fire and rehire is one change employers can prepare for now so let’s return to that. Gillian Harrington has been advising a number of clients in the energy sector where this is likely to be a big issue and earlier she joined me by phone from Aberdeen. So what are the biggest challenges for HR?

Gillian Harrington: “I think once the Bill comes into force, based it on its current format at the moment and what it's likely to look like, I think that the biggest challenges are probably like to be the day-one employment rights. That's going to be something that a lot of employers are going to struggle with, I think, because a lot of employers sometimes think, okay, if things don't work out then we've still got two years but, actually, employers are going to have to be thinking really strongly about making sure that performance is managed, making sure that they've got robust probationary periods in their contracts of employment, and following their procedures as well, making sure you've got those procedures in place. So I think day-one employment rights is very important and at the moment we don’t really know, from a collective consultation perspective, for redundancies, what that's going to look like. There's going to be slight changes in the definition of ‘establishment’ and at the moment, we don't know exactly that's going to look like that. Again, that's something that employers will be concerned about because it may be that if they've got a certain number of redundancies all over their premises, all over the UK, again, that's something that could be a trigger for collective consultation where they might not actually have that already. Another one that we think might be a big challenge is the fact that zero hours workers will get the right to get a more definitive working pattern as well and, again, that's something that, certainly in the energy sector, is likely to cause a big issue as well.”

Joe Glavina: “With fire and rehire, where do you expect most of the disputes to arise?”

Gillian Harrington: “I think with fire and rehire it’s probably not going to happen until a little bit later down the line where there may be circumstances where companies want to put forward changes to T's and C's, for example, but they don't have the contractual right to do so, and they almost reach a stalemate in discussions with employees, with the unions, where they're not able to agree to changes to terms and conditions. Now, currently, the next step might be to consider firing and then rehiring the employees on the new terms and conditions. That won't be an option for employers anymore unless in specific circumstances. So I think that is when the biggest issues are going to potentially arise and then I think that then means, looking backwards from that, I think that we should therefore be preparing for that and making sure that we've got as much flexibility in our contracts as we can to enable companies to make those changes so that we're almost avoiding that potential outcome later down the line once the fire and rehire ban comes into place.”

Joe Glavina: “Can you give me an example of how these new rules, when they're in force, might play out? So, for example, in the energy sector which you know well.”

Gillian Harrington: “So I think  in terms of the Employment Rights Bill and the energy sector I think that there'll be a lot of similarities between sectors in terms of day one employment rights could be an issue for everyone. I think that because there's very much an international workforce, a very mobile workforce in the energy sector there's a lot of changes going on in terms of numbers of people and I think with day one employment rights that might potentially have an impact if there's a high turnover of employees. One of the other changes, which I thought was quite interesting, and what I think might potentially have an impact on the energy sector as well, is the fact that it won't be permissible to replace a permanent employee with a worker, so a non- employee essentially, unless there's a specific reason such as redundancy and I think that given the nature of the energy sector that might be an issue where, for example, they maybe have not got security of contract, and they maybe want to replace a permanent staff member with a more flexible worker. So we are going to have to have a think about how we deal with that because that is perhaps not going to be a possibility going forward.”

The change in the law restricting the ability of employers to fire and rehire is set to come into force in October next year which gives HR teams a window of 12 months to prepare it. Last week Gillian talked to this programme about using that time to build flexibility into contracts while the law still allows employers to dismiss and re-engagement on different terms. That’s ‘Key role for HR as employers prepare for UK’s ‘fire & rehire’ reforms and is available now for viewing from the Out-Law website. 

- Link to HRNews programme: Key role for HR as employers prepare for UK’s ‘fire & rehire’ reforms’