Green - Labour market
Ban fire and rehire
Prohibit dismissal and re-engagement to impose worse terms except in genuine insolvency rescue.
Last updated: May 2026.
Policy baseline
The official ERA analysis costs fire-and-rehire reform at about GBP 98m EANDCB, but a full ban is broader.
- Official cost is a lower anchor.
- Distressed firms are the hard case.
- Redundancy risk may rise.
Core trade-offs
Workers keep existing terms. Employers lose a restructuring tool. In distressed firms, the trade-off may be better terms for survivors against more redundancies.
- Workers retain contract terms.
- Employers lose restructuring flexibility.
- Redundancy risk rises.
Illustrative fiscal impact
+GBP 0.1bn to +GBP 4.0bn. Central estimate: +GBP 0.8bn.
- Positive numbers mean public-finance pressure; negative numbers mean Exchequer savings.
- Gross costs are separated from tax, NI and benefit offsets.
- Private business costs are not automatically fiscal costs.
- Behavioural responses widen the range materially.
- This is not an official costing.
Economic impact by 2027-28
- Jobs: Likely negative in distressed firms if restructuring shifts from terms changes to redundancies.
- Wages: Protects existing terms for affected workers.
- Prices: Some firms may raise prices instead of cutting labour costs.
- GDP / productivity: Likely negative where it blocks viable restructuring or delays adjustment.
Assessment
A ban can stop abusive contract downgrades, but it also removes a tool that some firms use to avoid insolvency or redundancies. The design has to distinguish opportunistic threats from genuine rescue situations.
Confidence: Low. Official costs exist, but a full ban changes restructuring behaviour.
Main risks
- Redundancy substitution: Firms may choose layoffs where terms changes are barred.
- Insolvency boundary: The rescue exception may invite litigation and uncertainty.
- Public contracts: Commissioned providers may seek higher fees instead of cutting terms.
Safeguards
- Define rescue exceptions tightly.
- Require financial evidence before exceptions.
- Monitor redundancies after disputes.
Academic evidence
Autor, Kerr and Kugler, Economic Journal, 2007
Does Employment Protection Reduce Productivity?
Employment-protection changes can reduce productivity where firms face higher firing and adjustment costs.
Supports caution on policies that raise dismissal, scheduling or adjustment costs.
DiNardo, Fortin and Lemieux, Econometrica, 1996
Labor Market Institutions and the Distribution of Wages, 1973-1992
Labour-market institutions can compress wage inequality through wage floors and bargaining power.
Useful for distributional channels, not for claiming free fiscal gains.
Labor Market Institutions and the Distribution of Wages, 1973-1992 (1996)
UK government evidence
Department for Business and Trade, 2026
Employment Rights Act 2025 - Economic Analysis
The ERA economic analysis estimates around GBP 1bn annual direct business cost before social-care bargaining.
Provides official baseline costs and affected groups.
Department for Business and Trade, 2026
Employment Rights Act 2025 impact assessments
The IA collection separates guaranteed hours, unfair dismissal, fire and rehire, union and equality measures.
Prevents treating broad rights packages as one undifferentiated pledge.
Ministry of Justice, 2026
Tribunal Statistics Quarterly: October to December 2025
Employment Tribunals received 13,000 single claims and had 58,000 open single cases in Q3 2025.
Shows enforcement capacity is already a binding risk.
Tribunal Statistics Quarterly: October to December 2025 (2026)
HM Treasury, 2025
Whole of Government Accounts 2023-24
Whole of Government Accounts report GBP 240.5bn staff costs and GBP 263.7bn purchases in 2023-24.
Anchors paybill and procurement exposure.
Sources
- PolicyLens illustrative scenario methodology for ban fire and rehire Internal - PolicyLens, 2026
- Employment Rights Act 2025 - Economic Analysis UK government report - Department for Business and Trade, 2026
- Employment Rights Act 2025 impact assessments Impact assessment collection - Department for Business and Trade, 2026
- Tribunal Statistics Quarterly: October to December 2025 Official statistics - Ministry of Justice, 2026
- Whole of Government Accounts 2023-24 UK government accounts - HM Treasury, 2025
- Does Employment Protection Reduce Productivity? Academic article - Autor, Kerr and Kugler, Economic Journal, 2007
- Labor Market Institutions and the Distribution of Wages, 1973-1992 Academic article - DiNardo, Fortin and Lemieux, Econometrica, 1996
- Workers' Charter 2026 Party policy source - Green Party of England and Wales, 2026
Other Green policies
PolicyLens estimates are illustrative and not official costings.