ERA 2025: Fire and Rehire Reforms Pushed Back to March 2027 – What Schools and Trusts Need to Know

Further to our September 2026 update on fire and rehire reforms the government has confirmed a three-month delay to the new regime, alongside a consultation on a revised statutory Code of Practice. Here is what schools, academies and multi-academy trusts need to know.

Summary

The new fire and rehire provisions under the Employment Rights Act 2025 (“ERA 2025”) will now come into force in March 2027, rather than 1 January 2027 as previously expected.

There will be a revised Code of Practice on Dismissal and Re-engagement (“Code of Practice”) to reflect the legislative changes, which is expected to come into force in summer 2027.

The delay gives schools and trusts additional time to review contracts, policies and consultation procedures regarding proposed changes to terms and conditions of employment before the new regime takes effect, but the window should not be wasted.

The new statutory protections are expected to take effect before the revised Code of Practice comes into force, leaving employers without formal guidance for several months.

Implementation delayed to March 2027

The fire and rehire restrictions under ERA 2025 were previously expected to come into force on 1 January 2027. The government has now confirmed that implementation will be pushed back, with the new provisions taking effect in March 2027 instead.

The delay gives schools and trusts additional time to review contracts, policies and planned contractual changes before the stricter regime takes effect. Schools should treat this as a planning opportunity rather than a reason to delay action, particularly given the scale of change involved and the practical realities of consultation during term time.

The additional time gives schools an opportunity to conclude or implement any proposed consultation on changes to terms and conditions of employment under the existing, more flexible, regime.

Ongoing consultation on revised Code of Practice until 17 December 2026

The government has redrafted the existing version of the code and is now seeking views on these changes before the code is finalised and brought into effect. The consultation on the draft Code of Practice closes at 11:59pm on 17 December 2026. You can view the revised Code of Practice and respond to the consultation here: https://www.gov.uk/government/consultations/make-work-pay-revised-code-of-practice-on-dismissal-and-re-engagement

The revised Code of Practice is anticipated to come into effect in summer 2027, leaving school employers without any guidance between the legislative change in March 2027 and the implementation of the updated Code of Practice. Schools and trusts contemplating contractual changes during this period should take a cautious and well-documented approach, taking account of the draft Code wherever possible

What is changing: The Key Features of the New Regime

• ERA 2025 introduces a significantly stricter regime around “fire and rehire” (formally, dismissal and re-engagement) and little to no flexibility around when fire and rehire practices will be permitted. The core features are expected to be as follows.
• “Restricted variations” receive enhanced protection. ERA 2025 introduces the concept of a “restricted variation” to an employee’s contract, including changes to pay, total working hours, leave entitlement, pensions, and specified shift pattern changes. Where an employer dismisses and re-engages (or threatens to dismiss) an employee to impose a change that meets the definition of “restricted variation”, this will generally constitute an automatically unfair dismissal, with no minimum qualifying service required.
• Other contractual changes. Changes outside the restricted variations category are not automatically unfair but remain subject to enhanced ordinary unfair dismissal protections (and applicable qualifying service requirements). The draft Code of Practice says that, for such a dismissal to be fair, the employer should be able to show a potentially fair reason, that it acted reasonably, that it shared reasonable information and carried out meaningful consultation with the employee and any representatives, that it considered offering something in return for the change, and that it made exhaustive attempts to reach agreement with no reasonable alternative found.
• Only a narrow financial difficulties exemption. There is a limited exception where an employer can show genuine financial difficulties and meets the detailed conditions set out in the draft Code of Practice. For private sector employers, this requires showing that the restricted variation was aimed at eliminating, preventing, or significantly reducing or mitigating financial difficulties that were affecting, or were very likely in the immediate future to affect, the organisation’s ability to continue as a going concern, and that there was no reasonable alternative. Public sector employers (other than local authorities) face a different test based on their ability to carry out their statutory functions, assessed using judicial review principles, while local authorities must additionally show that a formal intervention direction relating to financial difficulties was in force at the time of dismissal. In every case, the exemption is intended to be narrow and is not a general justification for managing costs or improving competitiveness.
• Outsourcing to avoid the rules is also caught. Dismissing an employee and replacing them with someone who is not an employee (for example, an agency worker or contractor) but who carries out substantially the same work will also be automatically unfair. This does not apply, however, where the dismissal is genuinely attributable to a reduced or discontinued need for that work, such as a true redundancy situation or a legitimate decision to outsource a function that is no longer required in-house.

Expenses, Benefits and Shift Patterns: The Government’s Response

Alongside the delay, the government has published its response to a related consultation on how expenses, benefits in kind and shift pattern changes should be treated under the new regime. The key points are as follows.

• Most expenses and benefits in kind fall outside the restricted variations regime. However, travel expenses (including mileage), accommodation expenses and long-term accommodation benefits remain protected.
• Share schemes are excluded.
• A variation will only be “restricted” where the entitlement forms part of the employee’s contractual terms.
• In relation to shift patterns, the draft Code of Practice confirms that changes “specified in regulations” will be treated as restricted variations. The Government’s separate response to the related consultation indicates that this is intended to cover certain changes between day and night working, or weekday and weekend working, while other shift changes would generally remain unrestricted (subject to the enhanced fairness test). The underlying regulations have not yet been published, so this detail should be treated as indicative rather than final.

Detailed regulations are expected in autumn 2026. The government’s related consultation response indicates these are intended to take effect alongside the wider reforms in March 2027, although the draft Code of Practice text itself has not yet been fully updated to reflect the revised timetable, so this date should be treated as indicative pending confirmation.

What should Schools and MATs do now?

1. Review template contracts and terms and conditions. Audit standard employment contracts, staff handbooks and sector-specific terms (such as those derived from the School Teachers’ Pay and Conditions Document or local authority terms) to identify provisions touching on pay, hours, leave, pensions and shift patterns.
2. Identify provisions that will be difficult to change later. Where a school or trust anticipates needing to vary a core contractual term in future, it is worth identifying and addressing this now under the current regime, since imposing such a change by dismissal and re-engagement from March 2027 will be far harder to justify once the new regime is in force.
3. Strengthen and document consultation processes. Ensure any consultation on contractual change is genuine, well-planned and properly recorded, including the alternatives considered and any compromises offered.
4. Build in realistic timeframes and time for delay. Consultation, notice periods (including the longer notice periods typically applying to teaching staff) and governance processes all take time, and should be factored into any plans for contractual change well ahead of March 2027. Delays to timescales should be anticipated and built into the consultation timetable.
5. Take legal advice before significant contractual changes. Given the complexity of the new regime, the narrow financial difficulties exemption, and the transitional gap in the Code of Practice, schools and trusts should seek legal advice from specialist education employment lawyers before embarking on any significant changes to staff terms and conditions, particularly where dismissal and re-engagement is being considered.

Looking Ahead

The government’s response to the consultation on the draft Code of Practice may bring further changes or clarifications, particularly around the financial difficulties exemption and the detailed shift pattern regulations expected in autumn 2026. Schools and trusts should continue to monitor developments, particularly the outcome of the consultation, which closes on 17 December 2026.

This briefing is not intended to be a definitive statement of the law and is correct at the time of publication. It should not be taken as a substitute for professional legal advice. It does not represent the views of Winckworth Sherwood or any of the authors.

If your school or MAT require advice and assistance in relation to ERA 2025, proposed changes to staff terms and conditions, fire and rehire or any other school HR or employment law related matter please contact Winckworth Sherwood’s dedicated Schools HR helpdesk on schoolshr@wslaw.co.uk or 0345 026 8690.