The government’s Employment Rights Bill originally promised a sweeping clampdown on "fire and rehire" tactics. At its core, Clause 26 sought to make any dismissal for refusing a contract variation automatically unfair – unless the employer could prove imminent financial collapse and had followed a six step consultation checklist.

But recent proposed amendments suggest a significant softening of that position.

Narrower Scope: Only ‘Restricted Variations’ Covered

A key amendment would limit the new protections to ‘restricted variations’ only – rather than covering any and all contractual changes. This means the automatic unfair dismissal provisions will apply only to certain key terms:

• Pay

• Pensions

• Hours of work

• Holiday entitlement

Any other term defined in future Regulations

Crucially, the definition also includes adding a variation clause itself. So, if your business is considering adding such clauses into contracts, it may be prudent to act swiftly before this change comes into force.

Another amendment carves out minor variations – provided they don’t relate to pay, hours, or location of work. These changes will fall back into the general unfair dismissal regime, not the new automatic unfairness rules.

Consultation Checklist Scrapped – for Some

One of the more employer friendly amendments removes the much discussed six point consultation checklist – but only when the employer can show serious financial distress. In these cases, tribunals will revert to the traditional fairness test for unfair dismissal. That gives HR more breathing space: no mandatory steps to prove compliance with, but still a high bar to establish that a dismissal was fair.

For non-restricted variations, routine contract tweaks, for instance, the checklist makes a comeback. Employers must still follow a robust consultation process, offer inducements, and work hard to justify the fairness of dismissal if challenged. But at least the decision rests with the tribunal, not a default position of automatic unfairness.

Outsourcing Restrictions and Redundancy

In another bold move, a separate amendment would ban outsourcing as a redundancy workaround – unless the employer can prove serious financial distress. This raises questions about the future of IR35 arrangements, agency staffing, and TUPE avoidance.

The good news for employers? Location based redundancies will remain under the usual rules. This provides a welcome dose of clarity in an otherwise shifting landscape.

So, Where Do We Stand?

Many of these amendments hinge on Regulations yet to be drafted. Encouragingly for employers, the government’s recent roadmap commits to consulting on those Regulations ahead of a planned October 2026 implementation. That consultation is a strong sign these amendments have government backing – and are likely to pass.

In short, the government has watered down the original, more rigid version of the Bill –allowing for greater flexibility where employers can show genuine financial hardship or are making minor changes. But the pressure remains on employers to consult thoroughly, document decisions, and handle any dismissals with care.

If you would like more information, please contact Arvin Sandhu by email or on 01494 521301.