The UK government’s proposed Employment Rights Bill does not go far enough to protect workers from exploitative employment practices, according to the Institute of Employment Rights (IER).
The think tank, which is supported by trade unions and law firms, has warned that the legislation contains significant loopholes that would allow employers to continue using fire-and-rehire tactics.
Fire and rehire, the practice of dismissing workers and rehiring them on worse terms, became a major issue following the P&O Ferries scandal in 2022. Nearly 800 workers were dismissed without consultation and replaced with lower-paid agency staff, prompting public outcry and calls for legislative change. Three years on, the IER argues that the government’s current proposals do not provide sufficient protection to prevent similar situations.
While the Bill claims to ban fire and rehire, it allows dismissals under the justification of ‘likely financial difficulties’. The IER warns that without a clear legal definition of what constitutes financial difficulty, employers will be able to continue imposing worse terms on workers. The Bill does not require businesses to provide independent financial verification, making it possible for companies to justify dismissals without proper scrutiny.
Weak Penalties and Lack of Enforcement
The IER also highlights the lack of strict penalties for employers who breach the proposed rules. Companies like P&O have previously admitted to factoring in fines as a cost of doing business. Without stronger enforcement mechanisms, the think tank warns that the new legislation could be ineffective in deterring future abuses.
James Harrison, director of the IER, criticised the government’s approach, stating, “The government’s proposed ban on fire and rehire is riddled with loopholes that could render it meaningless. If rogue employers can still dismiss staff and impose worse conditions under the guise of ‘likely financial difficulties,’ this Bill is failing the very workers it claims to protect.”
Harrison added that under the current proposals, a company could still replace workers with agency staff on lower wages and worse conditions. “If P&O were to happen under this new legislation, it would all happen in exactly the same way, as there is nothing in the new law to stop a company from replacing workers with agency staff on lower pay and worse conditions,” he said.
Call for Stronger Protections and Global Standards
The IER argues that without significant amendments, the UK will lag behind international labour protections. The International Labour Organization (ILO) and the European Union enforce much stronger safeguards and enforcement measures to prevent unfair contractual changes.
The think tank is calling for urgent changes to the Bill, including a clear and legally binding definition of ‘financial difficulties’ and independent verification by financial auditors. It also recommends stricter state enforcement mechanisms with penalties substantial enough to deter fire-and-rehire practices.
In addition, the IER is advocating for stronger worker protections, including immediate reinstatement with full pay for those found to have been unlawfully dismissed. The group also supports removing compensation caps for unfair dismissal and breaches of collective consultation rules. As the Bill progresses through Parliament, Harrison urged the government to act.
“Without meaningful penalties, tighter legal definitions and properly resourced enforcement, we are back to square one. We’ve had inadequate protection for working people for a long time now, with employers having way too much power. This has to end,” he said.
