Dismissal and re-engagement reforms: pushed back until March 2027
The Employment Rights Act 2025 (“ERA 2025”) will significantly restrict dismissal and re-engagement practices, making it more difficult to dismiss an employee and offer to re-employ them on different contractual terms.
Once the relevant provisions take effect, dismissing an employee because they refuse certain contractual changes, known as “restricted variations”, will be automatically unfair. The protections will also cover dismissal to replace an employee with a non-employee. Restricted variations cover many changes employers may wish to make to employment contracts, with only a limited exception for employers in financial difficulties.
The combination of these protections and the removal of the statutory cap on the unfair dismissal compensatory award means greater potential liability when employers seek to impose contractual changes without agreement. Our ERA Insight article explains the reforms in more detail.
The Government’s latest consultation response clarifies how the protections will apply to expenses, benefits and shift patterns. It also confirms a change to the timetable: the fire and rehire reforms are now expected in March 2027, rather than January.
Alongside the response, the Government is consulting on a revised Code of Practice on dismissal and re-engagement. The key points for employers are:
• Changes to certain contractual travel expenses (including mileage), contractual accommodation expenses and long-term accommodation provided as a contractual benefit in kind will amount to restricted variations.
• Changes to share schemes will not be restricted variations.
• Certain contractual changes to shift patterns will be restricted variations. These include introducing day or night working, or weekday or weekend working, where it was not previously required. Not every adjustment to a shift pattern will fall within scope.
The draft Code provides practical guidance for employers considering dismissal and re-engagement, emphasising engagement with employees and a transparent process when proposing contractual changes.
Consultation on the draft Code of Practice closes on 17 December 2026. The revised Code is expected to take effect in summer 2027, while the current 2024 Code is expected to be revoked in March 2027. This would leave a gap between the two Codes; the position during that period remains unclear.
The publications give employers and HR professionals a clearer picture of the proposed framework, but the supporting regulations and final Code are still awaited. Both will be important to understanding the detailed requirements and how they will apply in practice.
Zero-hours and low-hours reforms: commencement date to be confirmed
The timetable has also changed for zero-hours and low-hours reforms. These reforms will introduce rights to guaranteed hours, reasonable notice of shifts and payment when shifts are cancelled or changed at short notice.
Implementation has been pushed back, but no revised commencement date has been announced. The Government’s ERA 2025 implementation timetable states that timings will be updated following consultation. Employers will therefore need to wait for confirmation of when these requirements will take effect.
Implementation of other 2027 reforms
The ERA 2025 implementation timetable has also been updated to give more specific dates for other reforms planned in 2027. Employers and HR professionals should review the updated timetable. These dates give employers a clearer planning framework, but remain subject to parliamentary processes and may change as consultation and policy development continue.
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