Expected: 2027
New rules will make it much harder for employers to change staff contracts by dismissing employees and offering new terms. These changes will affect many small and medium-sized businesses.
What is the position now?
At the moment, if an employer is unable to agree changes to terms of employment, there is an option to give notice and then offer a new contact on the different terms (often called “fire and rehire”). This can be lawful if:
• there is a genuine business reason for the change;
• the change is reasonable; and
• the employer has properly consulted with staff.
Since July 2024, employers must also follow a statutory code when consulting with staff or risk financial penalties.
What is changing?
Under the new law, dismissing someone because they refuse to accept certain changes to their contract will usually be automatically unfair. The law will now confirm that, If an employee is dismissed for refusing any of the restricted variations set out bellow, the dismissal will almost always be unlawful. pay cuts
• changes to pensions
• changes to working hours or shift patterns
• reducing holiday or other time off
• adding clauses that allow these changes to be made without the employee’s agreement
Is there any exception?
Yes – but it is very limited. An employer would need to show that:
• the business is in serious financial trouble (far beyond cash flow issues);
• the changes are genuinely aimed at saving the business; and
• there is no realistic alternative to making those changes.
Even then, employers will still need to show they followed a fair process and consulted properly.
What about other changes?
Some changes (such as moving someone’s place of work, notice periods, restrictive covenants or changing duties) are not automatically unlawful. However, dismissals linked to these changes will still be closely examined by a tribunal. Employers will need to show they acted reasonably and handled the situation fairly.
As at Feb 26