The Good, the Bad and the Ugly: Fire and Rehire in the Employment Rights Act 2025

This article considers the controversial topic of ‘fire and rehire’ and the regulatory choices in the Employment Rights Act 2025 (ERA). We argue that ‘fire and rehire’ is a practice that responds to the challenges posed by relational contracts: how should legislators balance flexibility and stability of contractual obligations when changing economic circumstances render performance more onerous for one of the contracting parties? The article then analyses the complex provisions dealing with ‘fire and rehire’ in the ERA, identifying likely interpretive problems and proposing solutions. Overall, we think that ‘fire and rehire’ regulation in ERA is based upon a compelling normative foundation. The unresolved issue is whether the restrictions on contractual flexibility will be excessive for employers, and if so whether this will lead to negative economic consequences in terms of redundancies, insolvency, or reduced employment opportunities.