Employment Rights Act: Preparing for change: ERA consultation and responses

The government has published its responses to consultation on dismissal and re-engagement and on extending dismissal protection for pregnant women and new mothers and a new consultation on a draft revised Code of Practice on Dismissal and Re-engagement.

 

Fire and rehire

On 22 October 2026 the government published for consultation a draft revised Code of Practice on Dismissal and Re-engagement. The consultation closes on 17 December 2026. The new 'fire and rehire' protections are now scheduled to commence in March 2027, rather than 1 January 2027 as previously indicated. The 2024 Code of Practice will be revoked in March 2027, although the new Code is not expected to take effect until Summer 2027 after Parliamentary approval.

For an explanation of the new statutory rules on dismissal and re-engagement you can access our previous alerts here and here. This alert focuses on what the revised Code adds, including the practical standards employment tribunals will use to judge an employer’s conduct. An unreasonable failure to follow the Code can still increase tribunal awards by up to 25%.

 

What is in the Code

• A restructured Code: The Code is reorganised around the new legal framework but keeps a chronological structure: information-sharing and consultation first, then steps to take if agreement cannot be reached.
• Information list: Employers should consider sharing what the new terms will look like, whether each change is a restricted or non-restricted variation, who is affected, the reasons and supporting evidence, whether financial difficulties are anticipated, timings, anything offered in return, and the alternatives considered. Any refusal to share information should be explained.
• Timing of consultation: Consultation should begin at a formative stage, when proposals can still be influenced or withdrawn, and continue for as long as reasonable. The Code warns against raising dismissal too early or too late.
• Reasonableness on both sides: A new section explains what reasonable conduct looks like. Predetermined outcomes, treating consultation as a formality, or dismissing where agreement could have been reached are unreasonable for employers. Rejecting a proposal is not, by itself, unreasonable for employees.
• Collective bargaining first: Where a union is recognised, collective bargaining should be the primary route, and employers should not make direct offers to employees until the agreed procedure is exhausted.
• Raising dismissal: Employers should contact Acas before raising the prospect of dismissal and re-engagement and must not use dismissal threats as a negotiating tactic where dismissal is not genuinely envisaged.
• Evidence of financial difficulties: The Code lists the evidence an employer should be able to show to rely on the financial difficulties exemption, including imminence, severity, organisational scope and why alternatives such as non-labour cost cuts or recruitment freezes would not work.
• After the consultation process: Employers should re-examine proposals in light of feedback, give at least contractual or statutory notice, change only the terms that were consulted on, and invite feedback once changes take effect.

Overall, the revised Code sets a high procedural standard and once it is in force tribunals will look at how information was shared and how consultation was run, not just at whether a consultation took place.

 

Changes to benefits and shift patterns: Government response

On 22 October 2026, the government also confirmed how incoming regulations will define restricted variations for expenses, benefits and shifts. It aims for these regulations to take effect alongside the main restrictions on contract variations in March 2027.

• Expenses and benefits: Only contractual entitlements to travel expenses (including mileage), accommodation expenses and accommodation provided as a benefit will be restricted. Benefits set out in a separate, non-contractual policy, or covered by a valid variation clause, can still be changed. Other benefits, including share schemes, fall outside the restricted variation category but remain subject to enhanced unfair dismissal, minimum wage and equality protections.
• Shift patterns: Moves between day and night working (night being 11pm to 6am, as in the Working Time Regulations) and between weekday and weekend working will be restricted. Availability windows are excluded. Smaller changes, such as moving a daytime shift by a few hours, are not restricted but attract enhanced unfair dismissal protection under the Employment Rights Act 2025 (ERA) as well as an employee right to reasonable notice of shift changes.
• Further change possible: The government will monitor the regime and may use its powers to add restricted variations if fire and rehire becomes prevalent in other areas.

 

Extending dismissal protection for pregnant women and new parents

The government has decided to retain all five of the existing fair reasons for dismissal, while strengthening the framework for assessing fairness during the protected period.

During the protected period, the government will replace the current band of reasonable responses test for determining whether a dismissal is fair with a proportionality test, requiring employers to justify dismissal as a proportionate means of achieving a legitimate aim. Employers will need to identify what business objective is being furthered by the decision to dismiss the employee, and to demonstrate that dismissal is a proportionate way of achieving that. This will ordinarily require an employer to be confident that less severe alternatives were not reasonably available in the circumstances (for example, temporary changes to a role, identifying suitable alternative roles).

The enhanced dismissal protections in respect of pregnancy will apply once an employee has informed their employer that they are pregnant and will apply throughout maternity leave and for six months following the end of leave.

The enhanced dismissal rights will be extended to adoption leave during the period of leave and for six months following the end of leave. The enhanced dismissal protections will also apply to shared parental leave, neonatal care leave and bereaved partner's paternity leave during the period of leave and for six months following the end of leave, where six or more continuous weeks of leave are taken.

The enhanced dismissal protections will be a ‘day one’ right, with no qualifying period, meaning employees will qualify for protections from the first day of employment.

Employees within the protected period may still be selected for redundancy. However, where a suitable alternative vacancy is available, the employer must offer it to them. The suitable alternative vacancy must not be less favourable than their current role in terms of pay, status or other terms and conditions. If there is no suitable alternative vacancy available, an employee may still be made redundant.

The changes are intended to come into effect in October 2027.

 

Timeline for implementation

The government has also updated the timeline for implementation of the ERA to reflect the above and other changes. Introduction of the right to guaranteed hours, the right to reasonable notice and payment for shifts cancelled or changed at short notice will be updated following the consultation process. Bereavement leave will come into force in April 2027. Changes to flexible working will come into force in October 2027.