Fire and rehire practices

The practice of fire and rehire (also called dismissal and re-engagement) occurs when an employer dismisses an employee and offers to rehire them on new terms. The new terms are usually more favourable toward the employer. The tactic is typically used when it has not been possible for the employer to vary the terms of the contract by agreement.

Up to 2026, the practice has not been unlawful in and of itself. However, as it does involve dismissal, the employer might face claims for unfair dismissal. If there are sufficient numbers of employees involved, the employer will also have a legal duty to undertake collective redundancy consultations first. From January 2027, unless the employer is experiencing financial difficulty, it will be automatically unfair to dismiss or replace an employee in order to make changes to the core terms of their employment contract (referred to as “restricted variations”).

This short briefing paper covers an explanation of fire and rehire practices, an outline of the relevant legal protections for employees, recent prominent cases at British Airways, Centrica and P&O Ferries and an outline of recent proposals for reform, including three Private Members Bills on the subject since 2020.