Following on from a swathe of consultations in Autumn 2025, this month (February 2026) has seen the publication of a further tranche of stakeholder engagement exercises on various aspects of the wide-ranging Employment Rights Act 2025 (ERA 2025).
The four consultations considered here cover a broad range of employment issues including ‘fire and rehire,’ Trade Union recognition, flexible working, and the law around tipping/gratuities.
A fifth consultation on modernising regulation of agency work, also published this month, will be analysed separately.
Fire and rehire: Changes to expenses, benefits, and shift patterns
In previous updates, we have explained the Government’s proposal to end the use of ‘fire and rehire’ by employers to force through core contractual changes, where these cannot be agreed with the employee. These measures are now expected to come into force in January 2027.
Where an employer uses ‘fire and rehire’ to make a ‘restricted variation’ to the employee’s contract, dismissal will be ‘automatically unfair’ (without any need for an employment tribunal to consider whether the employer has acted reasonably). Restricted variations will include reductions to pay; changes to pensions; changes to total hours; reductions to leave entitlement; and changes to shift patterns specified in regulations.
This consultation takes a closer look at changes to pay, considering whether employment expenses (such as travel and accommodation costs) and benefits in kind (such as the use of a vehicle, or private health insurance) should be excluded from the definition of pay for ‘fire and rehire’ purposes (giving employers greater flexibility to make changes in these areas).
The Government’s preferred position is that all expenses and benefits in kind should be excluded from the fire and rehire restrictions for clarity/simplicity. It recognises that most expenses/benefits in kind are set out in non-contractual policies in any event or, where they are contractual, there is usually an inbuilt power to vary or withdraw them. The consultation also acknowledges that ‘ordinary’ unfair dismissal protection (involving an assessment of the ‘reasonableness’ of the employer’s actions) will still be available if changes to expenses/benefits in kind are forced through by ‘fire and rehire’ (even if these elements of pay are not included as ‘restricted variations’).
The consultation also considers which changes to shift patterns should be ‘restricted variations’ (triggering automatic unfair dismissal if forced through without agreement). The Government’s recommendation is that only ‘extreme’ shift changes impacting an employee’s lifestyle, such as day to night working (and vice-versa) or weekday-weekend working (and vice-versa) should be restricted variations, leaving employers more leeway to use ‘fire and rehire’ to push through other shift pattern changes if required. A proposal to restrict employers from varying employee’s hours by more than a prescribed percentage (e.g. 50%) is discounted as too complex to implement effectively.
Published alongside the consultation is a detailed ‘options assessment’ setting out the rationale and projected compliance costs/economic impacts of the options presented.
Further consultation details
Closing date: 1 April 2026
Trade Unions; Recognition and e-balloting
While various reforms to Trade Union law implemented through ERA 2025 came into effect on 18 February the Government is consulting separately on discrete changes impacting recognition ballots. The broad aim of the changes is to improve Union access to workforces during the recognition processes, and to safeguard against any ‘unfair practices’ by employers that may disrupt the ballot or impact the outcome.
The consultation is split into two parts. Firstly, the existing Code of Practice on Access and Unfair Practices during recognition and derecognition ballots (published back in 2005) has been revised and updated to reference digital methods of communication (e.g. intranet and e-mail) and to reflect changes set out in ERA 2025. These changes include the removal of the requirement that 40% of the total workforce in the bargaining until must vote in favour of recognition; a simple majority of those that vote will be sufficient. There is also some ‘streamlining’ of processes allowing unions to obtain access to workers earlier in the recognition process. Note that this specific ‘right of access’ during the recognition process is separate from general changes to access arrangements set out elsewhere in the ERA2025.
The second part of the consultation focuses on electronic balloting in recognition and derecognition votes. The Government intends to use a phased approach, first allowing ‘hybrid’ electronic/postal voting for these purposes, before allowing ‘pure’ electronic balloting at a later date. The consultation questions explore ways to prevent employer ‘interference’ in a ‘pure’ electronic ballot, and how best to bring current safeguards up to date for modernised voting methods.
Closing date: 1 April 2026
Improving access to flexible working
Since 6 April 2024, the right to request flexible working has been available to employees from ‘Day 1’ of their employment (scrapping the previous requirement to have 26 weeks’ service). Employees are now also permitted to make two requests per year rather than one, and no longer need to consider or suggest solutions for any adverse effect the change might have on the employer. The timeframe for employers to respond to a request was reduced from three months to two months, alongside a new requirement for employers to consult employees and explore alternative options before refusing a request.
The ERA 2025 further specifies that an employer may only refuse a flexible working request if it is ‘reasonable’ to do so and must explain the rationale for refusal. The eight existing business reasons to refuse a request will remain unaltered. These changes, which are not expected to come into force until 2027, are cited by the Government as a move towards flexible working as a ‘default’ and a culture of employers thinking more creatively about flexibility.
Currently, there is no further detail set out in legislation about how employers should consult with employees regarding a flexible working request. The Government proposes to ‘address this gap’ by setting out a ‘light touch’ process in secondary legislation that employers will be legally required to follow. This will include holding a meeting with the employee and providing a written outcome.
Statutory guidance will be produced to help employers to understand and meet their obligations under the new ‘reasonableness’ test, setting out how employers can draw on the eight business reasons for rejecting a request.
The Government’s suggested process draws on existing ACAS non-statutory guidance on flexible working requests, which includes a detailed set of steps employers could choose to follow to meet the consultation requirement. ACAS will consider revising its guidance to include specific guidance for employers on the new ‘reasonableness’ test, which would involve a further public consultation.
The Government consultation seeks stakeholder views on current and proposed flexible working processes including:
- Whether employers made any changes to policies or resources following April 2024 changes
- Whether the number of statutory requests has increased/decreased/stayed the same?
- The objectives, content, and structure of the proposed statutory consultation meeting
- Hoe much additional time the proposed statutory process will take
- What additional guidance should be available and what format would be most helpful.
Further consultation details
Closing date: 30 April 2026
Tipping rules: Strengthening the Law
Since 1 October 2024 employers have been required to ensure that all tips, gratuities, and service charges are allocated fairly and transparently and that all ‘qualifying tips’ are passed on in full to workers without deductions by the employer. Central to these rules is the requirement to have in place a written tipping policy that is accessible to workers. The statutory ‘Code of Practice on the Fair and Transparent Distribution of Tips’ (the Code), came into force on the same date and provides a best-practice framework for employees in tipping industries.
s14 ERA 2025 includes new requirements, which are not yet in force, for employers to consult with workers when designing or revising tipping policies. Prior to developing a written policy, employers will be required to consult with the representatives of recognised trade unions or worker representatives, or, where there are no such representatives in place, workers likely to be affected by the policy. The written policy must be reviewed at least once every three years (with employers consulting workers each time). A written, anonymised summary of the views expressed in the consultation process must be made available to all workers at the place of business.
This Government consultation, launched on 5 February 2026, seeks views on these requirements, and to review how the current Code operates in practice. Stakeholders are invited to input on various issues including:
- Current tipping practices, and the factors considered when distributing tips
- How much time employee consultation on tipping policies is likely to take (from designing the process to providing feedback)
- Any barriers to effective employee consultation or anticipated challenges
- What, if any, further guidance, or templates might be useful (e.g. template tipping policies/tipping records)
- Any areas of the current Code that might be strengthened or improved
Further consultation details
Closing date: 1 April 2026.
