The finance director has run the numbers. Margins are tight, and the cleanest fix is a change to working hours, or perhaps to an allowance that was introduced years ago and never reviewed. “If they won’t agree, we just give notice and re-engage them on the new terms, don’t we?”
For years, that was a legally risky but widely used move. It’s about to become considerably harder.
What is changing
The Employment Rights Act 2025 restricts the use of fire and rehire, which is dismissing employees and offering to re-engage them on different terms in order to impose a change they have not agreed. The government’s timetable puts these restrictions in January 2027, after an earlier plan for October 2026 was pushed back. The detail is being fleshed out through regulations and guidance, so check the current position before you act.
In broad terms, dismissing someone for refusing a change to certain core terms, or to replace their terms, is set to be treated as automatically unfair, with only a narrow exception for genuine financial distress where the change is unavoidable. It’s a high bar, and not one a business can reach simply because margins have dipped.
Why now matters
If you’re thinking about changing contracts, the next few weeks and the way you handle them could matter a great deal.
Changes you implement properly and by agreement before the rules tighten will stand as they are. Changes you try to force through after January, using the old playbook, may expose you to automatically unfair dismissal claims.
That said, rushing is its own risk. A change pushed through badly in December is still a bad change. Consultation done in a hurry with a “take it or leave it” tone can damage trust, cost you good people, and build a case against you.
The right way to change a contract
Start with what you actually need. Be specific about the problem, whether that’s cost, flexibility or fairness between staff, and ask whether there are options short of changing terms. Sometimes there are.
Look at your contracts. Is there a variation clause, and does it genuinely cover what you want to do? Variation clauses are interpreted narrowly, and they don’t give you a free hand.
Consult properly. Explain the reason, share the numbers where you can, give people time to respond, and listen. Consultation isn’t a formality. Where it’s real, you’ll often find a version of the change that people can live with.
Offer something where you can. Phasing, protection for a period, or a trade-off elsewhere makes agreement likelier and shows you’re acting in good faith.
Document the process. If agreement isn’t reached, you need a record showing you tried hard to find it.
Be careful if the change affects many people. Collective consultation duties can apply when you propose dismissals across a set number of employees, and the rules around that are also due to change in 2027.
Charities and purpose-led organisations
Pay and hours decisions land differently in values-led organisations. Staff often accept lower pay for the mission, but they expect fairness and openness in return. A poorly handled change can damage culture and reputation faster than it saves money.
Where we come in
King HR Advisory supports employers in Sheffield, South Yorkshire and across the UK with contract variations, consultation plans and wider organisational change. If you’re considering a change to terms and conditions, we’d rather talk before you write the letter than after you’ve sent it. Book a discovery call and we’ll help you work out the safest route.