Is Fire And Rehire Legal In The UK? What Employers Should Know

Sometimes, you need to change employment terms to keep your business viable - for example, shifting hours, adjusting location or role scope, or revising pay structures to reflect market conditions.

When agreement proves hard to reach, some employers consider “fire and rehire”: dismissing employees and offering re‑engagement on new terms. It’s been all over the headlines, but what are your real legal options - and when (if ever) is fire and rehire lawful?

In this guide, we explain, in plain English, when fire and rehire can be legal, the rules you must follow, and safer alternatives to manage change without ending up in a costly tribunal.

What Is “Fire And Rehire” And Why Do Businesses Use It?

“Fire and rehire” (also called dismissal and re‑engagement) is where an employer dismisses staff and simultaneously offers them new employment on revised terms. Employers usually turn to it after attempts to vary contracts by consent have stalled.

Common drivers include:

• Restructuring to keep the business afloat (e.g. changing working patterns or duty stations).
• Aligning terms across teams after growth or acquisition.
• Adjusting pay/benefits to reflect new roles or economic conditions.

Important: Varying contracts by agreement is always the first, and legally safest, route. A well-planned consultation and a fair process often achieves change without dismissals. If you haven’t mapped your options yet, start with the basics of changing employment contracts.

Is Fire And Rehire Legal In The UK?

Yes - but only if you follow a fair process and have a fair reason. There is no blanket ban on dismissal and re‑engagement. However, tribunals scrutinise it closely and it can be unlawful if mishandled.

Key legal pillars to understand:

• Fair reason for dismissal: You need a potentially fair reason under the Employment Rights Act 1996. Most employers rely on “some other substantial reason” (SOSR) - for example, pressing business needs requiring contractual change.
• Fair procedure: Even with SOSR, you must follow a fair process: consult employees, consider alternatives, and give proper notice. If you unreasonably fail to consult or rush the process, the dismissal can be unfair.
• ACAS Code of Practice on Dismissal and Re‑engagement (2024): This statutory Code expects “meaningful consultation”, transparency about business reasons, sharing information to allow employees to understand the case for change, and exploring alternatives. Tribunals can uplift compensation by up to 25% if you unreasonably fail to follow the Code.
• Collective consultation: If you’re proposing to dismiss 20 or more employees at one establishment within 90 days (even if you intend to re‑engage), collective consultation rules apply (more on this below).
• Discrimination and automatic unfair dismissal: Changes must not directly or indirectly discriminate (Equality Act 2010), penalise whistleblowing, or punish employees for asserting statutory rights. Those cases can be “automatically unfair” regardless of service length.
• Notice and continuity: If you dismiss, you must give at least statutory or contractual notice (or pay in lieu), issue P45s where applicable, and manage continuity of employment if you’re re‑engaging immediately.

Bottom line: dismissal and re‑engagement can be legal in the UK, but the bar for fairness is high and the risks are real. Tribunals will ask: was the business reason genuine and substantial, were you transparent, and did you properly consult and consider alternatives?

When Must You Consult? Individual And Collective Duties

Consultation isn’t a box-tick - it’s the centre of a lawful approach.

Individual Consultation

For any employee you’re proposing to dismiss and re‑engage, inform them of the business rationale, provide supporting information where reasonable (e.g. projected costs, structural changes), listen to feedback, and genuinely consider alternatives they raise.

Good practice includes:

• Early written notice of the proposed change and its reasons.
• At least one (ideally several) consultation meetings with notes shared afterwards.
• A genuine willingness to adjust the proposal (e.g. phasing, buy‑out of terms, trial periods).

Collective Consultation (20+ Dismissals)

If you’re proposing to dismiss 20 or more employees at one establishment within a 90‑day period, you must collectively consult with appropriate representatives (trade union or elected reps). This applies even if your intention is re‑engagement on new terms.

Core requirements include:

• Starting consultation in good time and at least 30 days (20–99 dismissals) or 45 days (100+ dismissals) before the first dismissal takes effect.
• Providing prescribed information in writing to reps (reasons, numbers, selection methods, proposed timelines, etc.).
• Notifying the Secretary of State (form HR1). Failure can be a criminal offence for the company/office holders.

Getting collective consultation wrong can lead to a “protective award” of up to 90 days’ gross pay per affected employee - a serious financial risk for any SME. If collective duties might be triggered, seek Redundancy Advice promptly (even where your reason is SOSR rather than redundancy).

A Safer, Lawful Process To Change Terms (With Or Without Fire And Rehire)

Before you even contemplate dismissal, work through a structured change process. This can often achieve agreement - and if it doesn’t, it sets up the fairness of any eventual dismissal and re‑engagement.

1) Build Your Business Case

• Pin down the commercial drivers (costs, customers, compliance, technology). Add data where possible.
• Identify the specific contractual terms that need to change and why (hours, location, pay, duties).
• Assess equality impacts and reasonable adjustments for disabled staff.

This case will underpin consultation and any tribunal defence. It also helps you avoid over‑reaching changes you can’t justify.

2) Review Contracts, Policies And Custom

• Check whether any express variation or flexibility clauses exist (e.g. mobility, hours). Use them carefully and reasonably; they’re not carte blanche.
• Scan handbooks and past practice - benefits given consistently over time may become contractual through custom and practice.
• Note collective agreements or union recognition that may affect the route to change.

3) Consult To Seek Agreement

• Explain the rationale, the proposed new term, and the impact on staff. Invite alternatives.
• Offer mitigations where possible: phased implementation, pay protection periods, one‑off buy‑outs, retraining or redeployment.
• Record meetings and outcomes. Keep the door open to revised proposals.

Where agreement is reached, issue a written variation (and updated Employment Contract or confirmatory letter) and ensure payroll/HR systems align with new terms.

4) If Agreement Fails, Consider Dismissal And Re‑engagement

If change is critical and consent isn’t forthcoming, you may move to a dismissal and re‑engagement process - but only after you’ve followed the ACAS Code steps and can show that you:

• Identified and considered reasonable alternatives, including redeployment.
• Consulted meaningfully over a reasonable period.
• Limited changes to what’s necessary and proportionate.

Issue notice of dismissal (statutory or contractual minimum, whichever is higher), and at the same time offer re‑engagement on the new terms, with clear start dates and the right to appeal.

5) Manage The End‑To‑End Admin

• Serve valid notice or pay in lieu (check PILON clauses and tax treatment).
• Deal with holidays, benefits, and continuity of service correctly.
• Update handbooks and downstream documents to reflect the new terms.

Key Legal Risks (And How To Reduce Them)

Understanding the main pitfalls helps you steer clear of them.

Unfair Dismissal

Employees with the qualifying service for ordinary unfair dismissal protection can claim if the dismissal wasn’t for a fair reason or the process was unfair. To reduce risk:

• Document a robust business case (SOSR) and why change is necessary.
• Consult thoroughly and follow the ACAS Code of Practice. A failure can increase awards by up to 25%.
• Limit the change to what’s reasonably required and be consistent in how you apply it.

A helpful companion piece here is our employer checklist for ending an employment contract fairly.

Constructive Dismissal And Breach Of Contract

Unilaterally imposing changes without consent or proper process can be a repudiatory breach, allowing employees to resign and claim constructive dismissal. If you’re considering asserting a variation clause, sense‑check reasonableness and process first - our guide to constructive dismissal explains the traps.

Discrimination And Equality Risks

Changes that disadvantage protected groups (e.g. parents, disabled workers, older staff) can be indirectly discriminatory unless you can objectively justify them. Build an equality impact assessment into your planning and offer reasonable adjustments where needed.

Collective Consultation Failures

Missing collective duties when 20+ dismissals are proposed can mean protective awards of up to 90 days’ pay per affected employee, plus potential criminal liability for failing to file HR1. If you’re anywhere near the thresholds, treat consultation as a must-have and take advice early.

Victimisation/Whistleblowing And Automatic Unfair Dismissal

Never single out employees due to whistleblowing, union activity, or raising statutory rights. Those dismissals are automatically unfair, with no minimum service requirement.

Grievances And Tribunals

Handling concerns clumsily can escalate into formal disputes. Keep consultation notes, respond to concerns respectfully, and maintain an appeal route. This is also where many employers come unstuck - our explainer on why employers lose employment tribunals highlights the common mistakes.

Alternatives To Fire And Rehire You Should Consider First

Tribunals expect you to explore alternatives before dismissing and re‑engaging. Options might include:

• Voluntary agreement via enhanced consultation, phased change, or one‑off compensation.
• Redeployment to suitable alternative roles on the new terms.
• Temporary measures like reduced hours by consent, sabbaticals, or short‑time working where contracts allow.
• Natural attrition and hiring new starters on the new terms, rather than changing existing contracts en masse.
• Genuine redundancy if the role truly ceases or diminishes (separate legal test and payments) - if you’re here, consider tailored Redundancy Advice.
• Collective bargaining where recognised unions are in place - engaging constructively through collective bargaining can unlock workable compromises.

Essential Documents And Policies To Support Contract Changes

Getting your paperwork right makes change smoother and defensible.

• Employment contracts: Clear, up‑to‑date terms with well‑drafted variation, notice, PILON and flexibility clauses reduce friction when changes are needed. If your templates are outdated or patchy, refresh your Employment Contract before rollout.
• Staff handbook: Policies on consultation, grievances, equality, flexible working and appeals help you run a fair, consistent process. A robust Staff Handbook is your playbook when change gets complex.
• Change/consultation letters: Well‑structured letters that explain the business rationale, outline proposals, invite feedback and record outcomes show you’ve followed the ACAS Code.
• Side letters/variation agreements: Where agreement is reached, capture it in writing and update downstream systems so practice aligns with contract.
• Equality impact assessment: Keep a brief record of how you assessed and mitigated discrimination risks.

If you do end up dismissing and re‑engaging, ensure notice letters, offers of re‑engagement, and appeal documentation are tight, consistent and issued on time. Small paperwork gaps often undermine an otherwise strong business case.

Frequently Asked Questions

Do I Need Employees’ Consent To Change Terms?

Generally yes - unless you are relying on a narrow, reasonable flexibility clause or you have negotiated changes via collective bargaining. Imposing changes without consent risks breach of contract and constructive dismissal. Start by seeking consent through meaningful consultation and only consider dismissal and re‑engagement if absolutely necessary.

How Long Should Consultation Take?

There’s no fixed minimum for individual consultation, but the ACAS Code expects you to consult “for as long as reasonably possible”. For collective consultation (20+ proposed dismissals), there are statutory minimum periods. Either way, rushing is risky - a few weeks of genuine engagement can save months of litigation.

Is Fire And Rehire The Same As Redundancy?

No. Redundancy is where the need for work of a particular kind ceases or diminishes. Fire and rehire is typically SOSR (needing new terms for the role). The processes and payments differ - see our comparison of severance vs redundancy.

What If An Employee Refuses The New Terms?

Keep consulting, consider alternatives or mitigations, and weigh the business impact. If the change is essential and agreement remains impossible, dismissal and re‑engagement might be your last resort. This is a high‑risk step - revisit the ACAS Code, your business case and your consultation record before moving forward.

Can Probationers Or Short‑Service Employees Be Changed More Easily?

The fairness standards still apply, and discrimination or automatic unfair dismissal rules protect all staff. Short service can affect eligibility for ordinary unfair dismissal claims, but it’s not a licence to skip process. Following a fair approach is always wise - not least to protect culture and reduce disruption.

Practical Tips To Make Change Stick (And Keep It Lawful)

• “Nothing about me without me”: involve people early; it builds trust and generates solutions you may have missed.
• Be specific and proportionate: change only what you must, and justify each element.
• Phase where you can: time‑limited pay protection or gradual shift patterns can secure consent.
• Keep records: consultation notes, impact assessments and alternatives considered often win cases.
• Sanity‑check the legal bedrock: refresh contracts, align policies, and stress‑test proposals against the Employment Rights Act 1996 and the ACAS Code.
• Plan for appeals: even where you re‑engage, offering an appeal route shows fairness and catches issues early.
• Know your red lines: protected disclosures, pregnancy and maternity, trade union activities and discrimination are high‑risk areas - escalate for legal advice before acting.

Key Takeaways

• Is fire and rehire legal? Yes - but only with a genuine business reason, meaningful consultation, and a fair process that aligns with the ACAS Code of Practice.
• Always try agreement first. A structured consultation, proportionate proposals and phased changes often avoid dismissals entirely and protect morale.
• If 20+ dismissals are proposed at one establishment in 90 days, collective consultation rules and HR1 notification can apply - non‑compliance can be very costly.
• Main risks include unfair dismissal, discrimination, breach of contract and protective awards. Good records, equality impact checks and consistent messaging reduce exposure.
• Refresh your core documents - your Employment Contract and Staff Handbook - so any change is implemented cleanly and defensibly.
• If you do proceed to dismissal and re‑engagement, follow the ACAS Code steps, give proper notice, and manage continuity and appeals. Our resources on changing employment contracts and constructive dismissal are a good place to start.

If you’d like tailored help planning or managing a contract change process (with or without dismissal and re‑engagement), you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no‑obligations chat.