22/05/2026
For years, the default response when employment negotiations stalled was a version of the same conversation: consult, fail to agree, dismiss and re-engage.
That option is now effectively closed.
Under the Employment Rights Act 2025, it is automatically unfair to dismiss an employee where the principal reason is to re-engage them on varied contractual terms. The exceptions are narrow. The employer must show the variation was necessary to eliminate, prevent, or significantly reduce financial difficulties affecting its ability to carry on as a going concern. A desire to cut costs or improve efficiency will not qualify.
The financial exposure has also changed. Automatically unfair dismissal carries uncapped compensation from January 2027. An employer dismissing 20 employees to change their terms is not facing 20 capped claims. They are potentially facing 20 claims with unlimited compensation each.
There is still a lawful route to achieving contractual change. It involves genuine consultation, documented negotiation, and incentivised consent. Done properly, it works. But it requires planning, and a different approach to the process than most businesses are currently taking.
If your clients are planning restructures, changes to pay structures, or amendments to working arrangements, the old approach needs replacing now, not when they're mid-process.
If this is relevant to anything you're currently working through, feel free to message directly. 🌱