Effectively, yes — from 1 January 2027. Under the Employment Rights Act 2025, dismissing an employee because they refused a change to their terms and conditions — the practice known as "fire and rehire" (dismissal and re-engagement) — becomes automatically unfair dismissal.
The Narrow Exception
A fire-and-rehire dismissal will only be defensible where the employer can show the variation was needed to address genuine financial difficulties threatening the viability of the business as a going concern, and that dismissal was truly unavoidable. This is a deliberately high bar — cost-saving or preference will not qualify.
Until Then: Still High-Risk
Fire and rehire is already heavily constrained by the statutory Code of Practice (in force since 2024), with a 25% compensation uplift for non-compliance. The January 2027 change turns a risky tactic into an automatically unfair one.
How to Change Terms Lawfully
- Consult genuinely — explain the business case and listen to alternatives
- Seek agreement — most changes can be agreed with transparency and, where needed, transitional compensation
- Use flexibility clauses carefully — they cover only reasonable, clearly drafted changes
- Take advice before any dismissal linked to contract changes — see our FAQ on changing employment contract terms
Planning a restructure or contract harmonisation? Our employment law team can design a route that doesn't end in automatic unfair dismissal claims. Get advice.