Changing an employee's contract before January 2027

Most contract changes in a small business start as a practical problem. The shift pattern no longer fits the work, the pay structure was built for a smaller team, or the holiday year starts at an awkward point.

How you make that change is about to matter more. As checked on 2 October 2026, the government's implementation timetable, last updated on 25 September 2026, lists fire and rehire protections under January 2027, alongside the fall in the unfair dismissal qualifying period to six months. Government implementation timetable. The fallback employers reach for when someone says no, dismissing them and offering new terms, is scheduled to become automatically unfair for the changes that matter most: pay and the way it is calculated, pensions, hours, shift timing and time off. The wider timetable is on our Employment Rights Act key dates page.

The answer is not to rush a restructure through before Christmas. It is to know which of your planned changes sit in the restricted group, and to get those agreed and written up now.

Agree the change and confirm it in writing

The starting point has not changed. Acas states it plainly: "You must both agree to the changes. This is unless there's a clause in the contract that allows you to make a change without agreement." Acas on considering contract changes.

Before proposing anything, Acas suggests working out what issue you are trying to solve and whether a contract change is needed to solve it. Where more than one person is affected, it suggests discussing the change with employee representatives as well as with individuals.

If the first answer is no, the guidance is to keep going rather than to escalate: continue to explore all options for as long as is reasonably possible, be prepared to change your original proposal, and try to agree one change at a time.

Acas also sets out ways to make a change easier to accept. You can offer new, more beneficial terms to compensate for a less attractive one, which it calls "buying out" a term. You can introduce the change gradually, or on a temporary basis only. And it raises three questions worth asking before you propose anything at all: whether the change could be made to seem fairer, for example by changing senior managers' contracts in a similar way to everyone else's; whether every part of it is needed, or some of the aims could be met another way; and whether there is a solution that does not need a contract change. Acas on changes that cannot be agreed.

Once the change is agreed, it needs a written record. Where the change touches one of the matters that must be in the written statement of particulars, section 4 of the Employment Rights Act 1996 requires a written statement of the change at the earliest opportunity and, in any event, not later than one month after the change. Employment Rights Act 1996, section 4. Acas puts the same duty as putting the change in writing within one month, and confirms you do not have to reissue the whole written statement of employment particulars. A letter or an email setting out what has changed is enough. Acas on changing written terms.

Check what your flexibility clause actually allows

Some contracts carry a flexibility clause, sometimes called a variation clause, that looks like permission to change terms without asking. Acas is direct about the limits: "Employers must only use flexibility clauses to make changes that are reasonable." It adds that you may be in breach of contract if you try to make changes that are unreasonable, fail to inform and consult about a proposed change, or do not give reasonable notice, even where there is a clause that seems to allow the change. Acas on flexibility clauses.

So treat the clause as a reason to consult properly rather than a reason to skip it. And do not reach for a broader one as the answer to the January change: writing in a new term of that kind is itself on the restricted list below.

Know what is scheduled for January 2027

Section 28 of the Employment Rights Act 2025 inserts three new sections into the Employment Rights Act 1996. Employment Rights Act 2025, section 28. Like the rest of Part 1 of the Act, they extend to England, Scotland and Wales; Northern Ireland has its own employment framework. Employment Rights Act 2025, section 158.

The one that covers a refused change is section 104I. Once it is in force it will apply where the employee was employed for the purposes of a business carried on by the employer. A dismissal will then be regarded as unfair if the principal reason for it was either that the employer sought to make a "restricted variation" and the employee did not agree, or that the dismissal was to let the employer employ another person, or re-engage the same employee, under a varied contract doing the same or substantially the same duties, where at least one of the changed terms is itself a restricted variation.

Section 28 also amends section 108, so no qualifying period of service will apply to a section 104I claim. The section will not apply where, on the effective date of termination, the employee has not yet started work.

Section 104I(5) defines a restricted variation as any of the following:

• a reduction of, or removal of an entitlement to, any sum payable to the employee in connection with the employment
• where pay is set by a measure of the work done, including results achieved, a variation of that measure
• a variation of any term or condition relating to pensions or pension schemes
• a variation of the number of hours an employee is required to work
• a variation of the timing or duration of a shift, where it meets conditions to be specified in regulations
• a reduction in the amount of time off an employee is entitled to take
• a variation of a description specified in regulations
• including a term in the contract that lets the employer make any of the above without the employee's agreement

Parts of that list depend on regulations that do not yet exist. The shift entry bites only where a variation meets conditions the Secretary of State specifies, and the seventh entry lets the Secretary of State add descriptions, so the list can grow rather than being closed. The Act also gives the Secretary of State power to provide that "sum payable" does not include expenses, or payments and benefits in kind. As checked on 2 October 2026, none of those regulations has been made, so the edges of the restricted group are not yet settled.

Where a variation is not a restricted one, section 104J will apply instead. The dismissal will not be automatically unfair, but a tribunal will have to consider a set list of matters in deciding whether it was fair: the reason for the variation, the consultation carried out with the employee and with any recognised trade union or other representative, and anything offered to the employee in return for agreeing. Section 104K deals separately with dismissing an employee in order to replace them with someone who is not an employee.

There will be an exception, and it is narrow. For an employer that is not a local authority, section 104I will not apply if the employer shows two things. The first is that the reason for the restricted variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, financial difficulties affecting its ability to carry on the business as a going concern, either at the time of the dismissal or likely to in the immediate future. The second is that in all the circumstances it could not reasonably have avoided the need to make the variation. Even then the dismissal will still be judged on ordinary fairness, and the Act lists what a tribunal must weigh, including the consultation carried out and anything offered in return.

The date needs care. The government's timetable lists the protections under January 2027 and states that all future dates remain subject to parliamentary processes and may change. Government implementation timetable. Acas, updating its guidance on 1 October 2026, says dismissal and rehire will become an automatically unfair dismissal in most cases, gives the same timing, and says an updated code of practice to support the changes will be provided in 2027. Acas on the Employment Rights Act 2025.

No commencement regulations have been made for the protection itself. Two instruments have brought parts of section 28 into force, on 6 January 2026 and 6 April 2026. What they commenced was the machinery: the power for the Secretary of State to make the regulations the section refers to, not the protection it creates. SI 2026/3. SI 2026/323. That is a real difference from the six-month qualifying period, which has an instrument setting 1 January 2027 and transitional rules with it. SI 2026/559. Treat January 2027 as the government's stated intention rather than a date fixed in law, and check the position again before you rely on it.

The qualifying period change lands in the same month, which matters here. A dismissal over a refused change that falls outside section 104I will still be open to an ordinary unfair dismissal claim, and from 1 January 2027 that will include anyone with six months' service. Our guide to the six-month unfair dismissal qualifying period covers the probation and record-keeping side of that.

List the variations you need agreed before the date

Write down the contract changes you expect to need over the next six months, and mark the ones that touch pay, the way pay is calculated, pensions, hours, shift timing or time off. Those are the entries on the restricted list, and the ones to get agreed and confirmed in writing first.

For each one, decide who holds the conversation, what you can offer in return, and the date by which you will confirm it in writing.

Then stop treating dismissal and re-engagement as the fallback. It is lawful today, and Acas describes it as a last resort after all reasonable attempts to reach agreement have been exhausted. Acas on changes that cannot be agreed. It is also already governed by a statutory code, which came into effect on 18 July 2024 and applies in England, Scotland and Wales. Code of Practice (Dismissal and Re-engagement) Order 2024. GOV.UK states that employment tribunals have the power to apply an uplift of 25% of an employee's compensation if an employer unreasonably fails to comply with the Code where it applies. GOV.UK on the Code of Practice.

One threshold to watch. If you are proposing to dismiss and rehire 20 or more employees at one establishment within a period of 90 days or less, collective consultation duties apply: at least 30 days before the first proposed dismissal for 20 to 99 employees, and at least 45 days for 100 or more. Acas adds that failing to consult collectively can lead to a protective award, and that where a tribunal finds an employer unreasonably failed to follow the Code it could, from 20 January 2025, increase that award by up to 25%. Acas on changes that cannot be agreed. Collective consultation is outside the scope of this guide. If you are near that threshold, seek appropriate advice before you start.

Keep the record that shows it was agreed

For each variation, the file needs three things: what you consulted on and when, the employee's agreement, and the section 4 statement of the change. Employment Rights Act 1996, section 4. A dated note of the conversation, the employee's written acceptance and the letter confirming the new terms will do more than a long form completed after the event.

Record a refusal too, because silence works against the employee rather than for them. Acas says an employee's actions might count as agreeing to a change where they carry on working under the new terms and do not tell you they disagree. Someone who does object should make that clear, usually in writing and on a regular basis, for example each time they are paid, and Acas says they should only work under protest for a short time. Someone doing that can still claim damages for breach of contract at a civil court, or unlawful deduction of wages at an employment tribunal if the change affects their pay. Acas on changes that cannot be agreed.

How long to hold the records is a longer question than it used to be. Since 1 October 2026 most tribunal claims have had six months rather than three, so the retention schedule needs resetting. Commencement regulations, SI 2026/954. The ICO says you should consider whether you need information to defend possible future legal claims, should not keep data indefinitely "just in case", and should delete it when such a claim could no longer arise. It notes that this guidance is under review following the Data (Use and Access) Act. ICO on storage limitation.

Give the audit one owner, usually whoever holds the contracts, and put a date against each change rather than a quarter. Getting a variation agreed and written up does not remove the need to handle a refusal fairly, and no checklist decides whether a particular dismissal is fair. Before dismissing anyone over a refused change, check the current guidance and seek appropriate advice. Then add the audit to your wider action list; our guide to putting employment changes into practice shows how to keep that list honest about what is in force and what is still scheduled.

Common questions

Can I change an employee's contract without their agreement?

Acas says you must both agree to the change, unless the contract has a clause that allows you to make it without agreement. Even where such a flexibility clause exists, Acas says employers must only use it to make changes that are reasonable, and you may still be in breach of contract if you fail to inform and consult or do not give reasonable notice. Acas on flexibility clauses.

What is a restricted variation under the Employment Rights Act 2025?

Section 104I(5) of the Employment Rights Act 1996, inserted by section 28 of the Employment Rights Act 2025, lists the changes in the restricted group. They cover a cut to any sum payable, a change to the measure that sets pay, pensions, the number of hours worked, shift timing or duration where regulations specify the conditions, a reduction in time off, anything added by regulations, and inserting a term that lets the employer make such a change without agreement. As checked on 2 October 2026 the regulations the section refers to have not been made. Employment Rights Act 2025, section 28.

Is fire and rehire illegal in the UK?

Not at present. Dismissing an employee and offering new terms is lawful today, and Acas describes it as a last resort after reasonable attempts to reach agreement. Acas on changes that cannot be agreed. It is governed by a statutory Code of Practice that came into effect on 18 July 2024 and applies in England, Scotland and Wales, and GOV.UK states that tribunals have the power to apply an uplift of 25% of an employee's compensation where an employer unreasonably fails to comply with the Code. The government's timetable lists protections making such a dismissal automatically unfair under January 2027, but no commencement regulations have been made for them. GOV.UK on the Code of Practice.

How long do I have to put a contract change in writing?

Section 4 of the Employment Rights Act 1996 requires a written statement of the change at the earliest opportunity and, in any event, not later than one month after the change. Acas confirms you do not have to reissue the whole written statement of employment particulars; a letter or email setting out what has changed is enough. Acas on changing written terms.