We write to give you the details of some recent government backed proposed amendments to the Employment Rights Bill (“ERB”).
The House of Lords published a running list of all proposed amendments to the ERB (over 60 pages!) on July 7.
The most important updates being the following:
- Confidentiality clauses regarding the disclosure of harassment and discrimination will be void.
- Softening the ban on fire and re-hire provisions.
- Major changes to whistleblowing laws.
- Changes to the complex zero-hour worker rules.
Softening the ban on fire and re-hire provisions
Most significantly are the proposed amendments to soften the ban on fire and re-hire, which we wanted to focus on today.
Clause 26 of the ERB currently includes a ban on dismissing any employee for refusing to agree to a variation of their contract of employment.
It worked by adding in a new section into the Employment Rights Act which detailed that any fire and re-hire dismissal was to be automatically unfair unless the change was essential to avert detrimental or devastating financial distress and the employer had observed a six-point consultation checklist.
There has now been a huge U-turn to soften this ban, which will bring some welcomed relief to employers.
The proposed amendments seek to:
- Move away from a blanket ban on all fire and rehire situations to the ban only covering ‘restricted variations’, not any variation. ‘Restricted variations’ shall mean pay, pension, hours of work, holiday entitlement and anything else the Secretary of State sets outs in the Regulations.
Importantly, a ‘Restricted variation’ is proposed to also extend to a variation to add a variation clause into a contract of employment. Therefore, any employer who wants to amend their contracts of employment to include a variation clause are advised to speak with us and start this process now ahead of the new laws coming into effect (October 2026).
- Omit the six-point consultation checklist; so once an employer establishes the detrimental financial distress defence (or exemption), the tribunal will revert to the reasonableness test for unfair dismissal. That being said, any dismissal remains high-stakes as it will be automatically unfair if the employer cannot establish imminent business collapse if the changes are not made.
- If an employer dismisses an employee due to the refusal to accept a non restricted variation (i.e., a type of variation which is not a ‘restricted variation’), there is no automatic unfair dismissal. Instead, it is noted that the Tribunal will consider the reason for the variation, whether sufficient consultation had been carried out, when consider the fairness of the dismissal following an employee’s refusal to agree to the variation. This gives employers chance to argue overall fairness.
- Introduce a new right; a dismissal of an employee where the reason for replacing them with individuals who are not employees will be automatically unfair. In essence, the financial difficulty exemption does not apply if any substitute is carrying out the same activities as the employee. For example, this would prevent employers dismissing employees to replace them with cheaper alternatives, like contractors, or alternatives with fewer rights.
Please note, that in the government’s roadmap, which was published last week, it said that it would be consulting on the Regulations concerning ‘fire and rehire’ with a view to the new law coming into play in October 2026. Since the government has said there will be consultation over Regulations, and since these amendments require Regulations, it suggests these amendments have government approval and will pass.
We will have further details following the House of Lords report stages, which are now 21 and 23 July 2025.
As always, if you need any support from your Employment Law Advisor, please contact them on 01274 864 999
