PolicyLens

Methodology note

Ban fire and rehire: calculation note

Scenario estimate showing gross costs, offsets and behavioural uncertainty; not an official costing.

View main policy page: Ban fire and rehire

Central fiscal result

+GBP 0.8bn - Net public-finance impact in 2027-28

Low case: +GBP 0.1bn. High case: +GBP 4.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Prohibit dismissal and re-engagement to impose worse terms except in genuine insolvency rescue.
  • Baseline is current law and published official data unless stated.
  • Private business costs are excluded unless they affect tax or procurement.
  • Target year is 2027-28, with later years shown separately.

Affected population

  • Unit is employers using dismissal-and-reengagement threats.
  • Official affected count is not the whole economy.
  • Public fiscal exposure comes through public employers and contracts.
  • Distressed firms create the largest economic risk.

Gross impact

  • ERA Table A10 gives fire-and-rehire cost around GBP 0.098bn EANDCB.
  • Central adds public HR, tribunal and procurement costs.
  • Employment/welfare risk is GBP 0.30bn central.
  • Tax offsets are small and uncertain.

Fiscal build-up, central case

  • Public-sector HR and legal costs: +GBP 0.15bn
  • Tribunal and Acas capacity: +GBP 0.15bn
  • Public procurement pass-through: +GBP 0.30bn
  • Employment and welfare risk: +GBP 0.30bn
  • Tax and NI offsets: -GBP 0.10bn

Central net impact: +GBP 0.8bn in 2027-28.

Behaviour and pass-through

  • Low case assumes narrow abusive-use ban.
  • Central assumes broader ban with rescue exception.
  • High case assumes more redundancies and disputes.
  • Firms may shift to layoffs or insolvency.
  • No retention saving is deducted.

Phasing

  • 2026-27: +GBP 0.2bn. Guidance and disputes.
  • 2027-28: +GBP 0.8bn. Full ban applies.
  • 2028-29: +GBP 0.9bn. Case law develops.
  • 2029-30: +GBP 1.0bn. Restructuring adjusts.

Main source groups

  • S1: S1 ERA Table A10: fire-and-rehire cost about GBP 98m EANDCB.
  • S2: S2 Tribunal stats: enforcement capacity is constrained.
  • S3: S3 WGA: public procurement creates pass-through exposure.
  • S4: S4 Autor/Kerr/Kugler: constraints can reduce adjustment and productivity.
  • S5: S5 ERA analysis: business costs are concentrated in flexible employers.