What is changing?
A dismissal will be automatically unfair where the sole or principal reason for the dismissal is because the employer sought to make a “restricted variation” (such as changes to pay, holiday, working hours) to the employee’s terms and conditions of employment and the employee did not agree.
Automatic unfair dismissal will also apply if the employer employs someone else, or re-engages the employee in question (under “restricted” varied terms) to carry out substantially the same duties.
There will be a financial difficulty exceptions (affecting the employers ability to carry on the business as a going concern or, for public sector employers, the financial sustainability of carrying out the employer’s statutory functions).
The Statutory Code of Practice will apply to non-restricted variations.
When is this changing?
Changes likely to take effect in October 2026.
How can I prepare?
- Review Employment Contracts
- Identify clauses that allow unilateral changes to terms.
- Consider “variation clauses” to ensure they do not trigger automatic unfair dismissal.
- Consultation Processes
- Look at ways of strengthening consultations.
- There will need to be a genuine dialogue with employees.
- Develop internal protocols for managing contract changes fairly and lawfully.
- Training
- Train managers and HR teams so they fully understand employer obligations and know when to follow the Statutory Code of Practice
- Risk Assessments
- Avoid using fire and rehire as a negotiation tactic.
- Consider mediation and develop internal dispute resolution procedures.
- Records
- Keep detailed records of consultations and of the steps taken.
- Engage Legal and HR Teams
- Stay informed on developments relating to the ERA