Government consults on revised fire and rehire code

The government has launched a consultation on an updated statutory code of practice covering dismissal and re-engagement, seeking to align employer guidance with restrictions set out in the Employment Rights Act 2025 that have not yet fully commenced. The existing 2024 statutory code remains in force during the consultation.

The exercise, published on 22 October 2026, concerns the rules and procedures employers should follow when seeking changes to employment terms that could result in workers being dismissed and offered new contracts. Ministers have redrafted the existing code but are asking for responses before a final version is brought into effect.

Fire and rehire is the practice of dismissing employees and offering to re-engage them on altered terms. It can arise where an organisation wants to revise pay structures, working hours, shift patterns or other contractual conditions but cannot reach agreement with the affected workforce. The government also addresses related fire and replace arrangements.

The Employment Rights Act 2025 strengthens restrictions on dismissals used to impose certain contractual changes. Alongside the draft code, the government has said it intends to treat changes between day and night work, or between weekday and weekend work, as restricted shift variations. It also proposes rules on changes to payments and some benefits. These are proposals for further regulations, not evidence that every contractual variation is already prohibited.

For employers, the practical consequences reach further than personnel documentation. Reworking shift patterns or contractual pay arrangements may be central to a manufacturing, logistics or services restructuring programme. Where changes are commercially necessary, companies will need to demonstrate the rationale, engage meaningfully with employees and assess alternatives before considering dismissal.

Existing employment law already creates obligations around fair process, collective consultation in relevant circumstances, discrimination and contract variation. A revised code would sit alongside those rules. It would be unsafe to assume that consulting under the code alone makes a dismissal lawful, or that every disagreement over employment terms permits the same response.

Managers negotiating changes across large workforces face particular difficulties. Different locations may have varied contractual arrangements, recognised trade unions or employee representatives, and operational constraints. Inconsistent approaches can create employee relations disputes even before formal legal questions arise.

Companies contemplating significant changes should identify which terms are contractual, which can be varied under existing arrangements and which genuinely require fresh agreement. Financial modelling also matters: savings from revised terms need to be considered alongside recruitment costs, disruption, retention risks and the effect on service or production quality.

Employers face a phased timetable. The revised code consultation runs until 17 December 2026, while the government has indicated that some restricted-variation regulations are now aimed at March 2027 and the updated code at summer 2027. Those are prospective dates. The existing 2024 code and applicable employment law remain the appropriate reference points until the new measures commence.

The consultation creates an opportunity for employer organisations, unions and individual businesses to test whether the proposed guidance is workable in circumstances involving genuine financial difficulty or operational change. The eventual code will need to be specific enough to support compliance without encouraging procedural formality that obscures meaningful negotiations.

Consultation responses may also expose differences between sectors. A retailer changing opening hours, an industrial employer adjusting shift premiums and a professional services group redesigning incentive pay can each face distinct operational constraints. A code that speaks only in general principles may provide limited assistance when management is deciding what constitutes meaningful consultation or reasonable alternatives. Employers will therefore need to examine the eventual guidance alongside the legislation and case law, rather than substitute a checklist for a properly evidenced negotiation. Collective relations will remain especially important where recognised representatives are involved.

Organisations considering contract changes should prepare clear evidence of their objectives, engage affected employees early and keep an audit trail of alternatives considered. Final compliance work must follow the published statutory code once the consultation has concluded and the government confirms its commencement.