Employment Updates November 2026
12th November 2026
12th November 2026
At present, “fire and rehire” remains a potentially lawful way of changing contractual terms where agreement cannot be reached. An employer can give notice of dismissal on existing contractual terms and offer re-engagement on amended terms. Such a dismissal may rely on the potentially fair reason of “some other substantial reason” (SOSR). This is providing that there is a sound business reason for the change, and the employer has acted reasonably. This usually includes provision of evidence of proper consultation. The current statutory Code of Practice, introduced in 2024, already stresses that dismissal and re-engagement should be a last resort.
From March 2027, however, the landscape changes fundamentally. The implementation date itself is new as the reforms had previously been expected in January 2027.
Under the Employment Rights Act 2025, dismissal to impose a “restricted variation” will become automatically unfair unless the employer can satisfy a narrow financial difficulties exception. Restricted variations include:
Regarding limitations to this, the financial difficulties exception sets a deliberately high bar. Broadly, the difficulties must threaten the organisation’s ability to continue as a going concern, and the employer must have been unable reasonably to avoid the need for the change. The new draft Code of Practice on dismissal and re-engagement helpfully explains what financial difficulties might look like in the private sector, the public sector, and for local authority employers.
Dismissals to secure other unrestricted changes will remain potentially fair for SOSR, but subject to a more demanding statutory fairness framework.
The Code of Practice provides the practical framework for this brave new world save for an unusual wrinkle. The existing 2024 Code is expected to be withdrawn when the new regime starts in March 2027. This does not coincide with the activation of the replacement Code which is not expected to take effect until summer 2027 and will potentially leav employers navigating the new statutory regime for several months without a Code.
Prime Minister Andy Burnham has announced plans to legislate in order to tackle non-compete clauses, arguing that some businesses have gone “too far”, and that restrictions which leave workers sitting “on the sidelines” can stunt innovation and trap workers.
Post-termination restrictions in an employment context generally involve contractual provisions which limit the freedom of the employee for a restricted period following the termination of their employment. They cover:
Non-competes are the most draconian because they can prevent someone earning a living in their chosen field.
All restrictive covenants are restraints of trade and are only enforceable where they go no further than is reasonably necessary to protect a legitimate business interest. This covers instances such as confidential information or customer connections. For this reason, the drafting of such clauses is critical. Employers need to pick a limited duration (one year is generally the maximum that anyone would attempt to include) and need to be drafted as narrowly as possible.
The Government is concerned however that this may not provide sufficient protection as employees may feel under obligation to comply with an intimidating looking restriction rather than risk expensive litigation, even where the clause might ultimately be unenforceable.
A recent Government working paper floated several possibilities:
The previous Government had proposed a three-month cap to non-competes but never legislated.
As is normally the case, there are other models. In France, for example, an enforceable non-compete must include financial compensation for the employee. This can be seen in a number of European countries such as Poland, Germany, and Spain. The UK previously consulted on a similar “pay to restrict” approach but it never followed through on the idea.
For now, the destination is clearer than the route: Government intends to intervene. HR teams may therefore want to start asking whether non-competes are genuinely necessary, or whether carefully drafted confidentiality, non-solicitation and non-dealing provisions would adequately protect the business.
Whistleblowing protection has been part of UK employment law for almost 30 years. Now, the Government is carrying out the widest review of the law since the Public Interest Disclosure Act 1998.
So, what is the law now and what could change?
Not every complaint made at work is whistleblowing. To qualify for protection, a worker must disclose information which they reasonably believe shows one of seven types of wrongdoing.
These include;
Since April 2026, the list also specifically includes sexual harassment that has happened, is happening or is likely to happen.
The worker must also reasonably believe that their disclosure is in the public interest. This helps distinguish whistleblowing from a purely personal complaint, such as an individual dispute regarding their own contract.
Who they tell can also matters. Raising concerns with their employer is usually the most straightforward route to protection but disclosures can also be made to certain outside organisations, known as “prescribed persons”. It should be noted additional rules apply in the latter circumstance.
If someone is protected as a whistleblower, they must not be subjected to a detriment because they spoke up. In simple terms, they must not be treated badly because of their disclosure. This means an employee who is dismissed for whistleblowing can also claim automatically unfair dismissal.
There is an additional remedy for employees called interim relief. In some whistleblowing dismissal cases, an employee can ask a tribunal to effectively preserve their employment or pay until the full case is decided. The current deadline for applying is extremely short though: just seven days after dismissal.
The Government is considering extending whistleblowing protection to more people, including some self-employed individuals, non-executive directors, charity trustees and job applicants. It is also looking at changing the rules about what can be disclosed and who concerns can be raised with.
For HR, one of the biggest proposals is a new legal duty to have whistleblowing policies and procedures. This could apply to private sector employers with 50 or more employees, and would come with civil penalties for getting it wrong.
Other proposals include extending the interim relief deadline from seven to fourteen days and introducing financial rewards for some whistleblowers who report economic crime to the Serious Fraud Office.
Nothing has changed yet. But the direction is important: employers may increasingly be expected not simply to protect whistleblowers, but to have effective systems in place that make it safe for people to speak up.
The consultation closes on 8 January 2027.
New fire and rehire rules are due to come into force in March 2027. One of the first questions HR will need to ask when proposing changes to employees’ contracts is: is this a “restricted variation”? That matters because restricted variations receive much stronger protection under the new rules. A decision to dismiss in order to make a restricted variation to contractual terms will be automatically unfair unless the employer is able to rely upon a very narrow ‘business distress’ exemption.
Restricted variations already include changes to important contractual terms such as pay, pensions, hours and time off. The Government has now confirmed how some less obvious changes will be treated.
Most expenses and benefits in kind will fall outside the restricted category. However, contractual travel expenses (including mileage), accommodation expenses, and long-term accommodation provided as a benefit in kind will be included. Share schemes will not.
Some significant changes to shift patterns will also be restricted. For example, this will include requiring someone who previously worked during the day to work nights (11pm–6am) or requiring someone who worked weekdays to work weekends. Smaller changes, such as moving a daytime shift by a few hours, will not be restricted.
There is another important point: the right must be contractual in the first place. Changing a genuinely non-contractual benefit, or making a change already permitted by the contract, may therefore be treated differently.
If an employee is dismissed because they refuse to accept a restricted variation, their dismissal will generally be automatically unfair. There is only a narrow exception, which is that the employer is facing serious financial difficulties.
Other contractual changes do not receive that same protection. A dismissal to impose an unrestricted variation may still be unfair, but the tribunal will be applying ordinary unfair dismissal principles. They will look at matters such as the employer’s reasons, consultation and what was offered to employees in return. The only slight ‘tweak’ to this set out in the ERA 2025 changes is that the tribunal will additionally look at a statutory checklist when considering fairness. The checklist comprises the reason for the variation, the extent of consultation, and incentives offered for agreement.
Before starting any contractual change exercise:
Employees who are pregnant, on maternity leave or taking other types of family leave, already have additional protection against dismissal.
From October 2027, those protections are going to become significantly stronger.
The Government has now confirmed how new rules introduced by the Employment Rights Act 2025 will work in practice.
Employers will still be able to dismiss a protected employee for one of the usual potentially fair reasons – conduct, capability, redundancy, illegality or some other substantial reason. However, it will become harder for an employer to show that the dismissal was fair.
At present, an employer generally needs to show that its decision to dismiss was reasonable in the circumstances, and fell within the ‘band of reasonable responses’ an employer might have in a given situation. There may be several ‘fair’ outcomes. If a tribunal prefers an alternative outcome but dismissal is one of the options that falls within the ‘reasonable responses’ band, then the dismissal will be fair. The tribunal cannot substitute its own view for that of the employer. Under the new rules, where an employee is within the protected period, the employer will instead have to show that dismissal was a proportionate means of achieving a legitimate aim. This is a harder test for the employer to meet. In practical terms, HR will need to ask: was dismissal really necessary, or was there another reasonable way of dealing with the situation?
For example, before dismissal, an employer may need to consider whether additional support, temporary changes to duties, adjustments or an alternative role could address the problem instead.
This extended protection will apply from day one of employment. For pregnant employees, it will start when they tell their employer they are pregnant. It will continue during maternity leave and for six months after that leave ends. Similar protection will apply to employees taking adoption leave (starting from the day adoption leave starts) and certain other types of family leave, including shared parental, bereaved partners paternity leave, and neonatal care leave (where protection will apply during leave and, provided a period of at least six continuous weeks of leave are taken, for six months following return).
The existing special rules protecting pregnant employees and new parents in redundancy situations will also continue to apply.
For HR, the key message is simple: spot when the enhanced protection applies and take extra care before dismissal. From October 2027, simply showing that dismissal was a reasonable response may not be enough.
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