The structure of the UK’s labour market has seen a marked increase in flexible and often precarious working arrangements. Among the most debated are zero-hours contracts (ZHCs) and the practice of ‘fire-and-rehire’. These practices are often seen as manifestations of a significant power imbalance favouring employers. A proposed Employment Rights Act 2025 (hereafter ‘the 2025 Act’), reflecting current political proposals for reform (Labour Party, 2024), aims to address these issues directly. This essay will argue that while the 2025 Act would introduce significant new protections that represent a rebalancing of power, this rebalancing is likely to be partial rather than complete. The proposed ban on fire-and-rehire constitutes a more genuine shift in power than the reforms to ZHCs, which, although beneficial, may be susceptible to employer strategies that maintain flexibility and limit worker security. Therefore, the 2025 Act will mark a positive step for workers but may not fully resolve the underlying power dynamics inherent in these forms of employment.
Zero-Hours Contracts: A Partial Rebalancing
Zero-hours contracts are characterised by the absence of any guaranteed hours of work, creating significant income and schedule insecurity for workers. The current legal framework offers limited protection. The primary specific protection is found in the Small Business, Enterprise and Employment Act 2015, which inserted section 27A into the Employment Rights Act 1996 (ERA 1996), banning the use of exclusivity clauses in ZHCs. This prevents an employer from restricting a ZHC worker from seeking work elsewhere. However, this does little to address the core problem of insecurity identified in government-commissioned reviews like the Taylor Review of Modern Working Practices, which highlighted the “one-sided flexibility” that benefits the employer but places the risk of inactivity on the worker (Taylor, 2017). Workers on ZHCs often struggle to access financial products, secure housing, and plan their lives, illustrating a clear power imbalance where the employer’s need for a flexible workforce is prioritised over the worker’s need for security.
The proposed 2025 Act seeks to address this by introducing new rights for those on insecure contracts. Based on current policy proposals, it is anticipated the legislation will provide a right for workers to a contract that reflects the hours they regularly work over a specific reference period, along with a right to reasonable notice of shifts (Labour Party, 2024). These changes are intended to tackle the one-sided nature of flexibility by giving workers a pathway to more predictable hours and pay. On the surface, this appears to be a substantial rebalancing of power. A worker who consistently works 20 hours a week would, in theory, be able to convert their ZHC into a contract guaranteeing those hours, thereby gaining stability and predictability. This would give them a stronger legal footing from which to demand formalisation of their working pattern, shifting power from the employer’s complete discretion towards a right enforceable by the worker.
However, the question of whether this genuinely rebalances power depends on the practical implementation and the potential for employers to adapt. A significant concern is how a “regular” pattern of work will be defined. If the qualifying period is long, or the definition of regularity is too strict, many workers in sectors with seasonal or fluctuating demand may never meet the criteria. Employers seeking to retain a flexible workforce could potentially ‘game’ the system by carefully managing rotas to ensure working hours remain irregular, thus preventing the right to a predictable contract from arising. For instance, an employer might offer 25 hours one week and 10 the next, deliberately breaking the pattern required to trigger the right. This suggests that the employer, who still holds the power to offer or withhold hours, can actively work to prevent the rebalancing from taking effect.
Furthermore, a right to ‘reasonable notice’ of shifts is also open to interpretation. While it is an improvement on having shifts cancelled at the last minute without consequence, what is ‘reasonable’ will vary by industry and context. Without a statutory minimum notice period, disputes are likely, and the individual worker may feel pressured to accept short-notice shifts to remain in the employer’s favour for future work. Therefore, while the proposals in the 2025 Act would undoubtedly improve the situation for some ZHC workers and provide a new legal avenue to challenge insecurity, they do not eliminate the fundamental power of the employer to control the supply of work. The power balance is shifted, but it is not necessarily ‘genuinely’ rebalanced, as employers may retain significant practical advantages to maintain a flexible workforce.
Fire-and-Rehire: A More Genuine Shift in Power
The practice of ‘fire-and-rehire’ involves an employer dismissing staff and immediately offering them re-employment on new, usually less favourable, terms and conditions. If employees refuse the new terms, their dismissal stands. Under current law, this practice is not unlawful per se. An employer can potentially defend an unfair dismissal claim arising from this process by showing a sound business reason for the changes and following a fair consultation procedure. The dismissal may be fair if it is for ‘Some Other Substantial Reason’ (SOSR) under section 98(1)(b) of the ERA 1996. This has been criticised as creating a situation where employees are presented with a choice between accepting worse conditions or losing their job, a clear example of a severe power imbalance. The controversy surrounding P&O Ferries’ dismissal of 800 staff in 2022, while involving a failure to consult rather than a classic fire-and-rehire scenario, highlighted public and political concern over coercive employer practices (Department for Business and Trade, 2023).
The 2025 Act is expected to effectively ban the practice. It is proposed that the legislation will overhaul unfair dismissal law to prevent employers from dismissing employees who refuse to accept unilateral changes to their contract (Labour Party, 2024). This would mean that an inability to reach an agreement on new terms would no longer be a valid reason for dismissal. This reform represents a far more fundamental and genuine rebalancing of power than the ZHC proposals. By removing the ‘fire’ option from the fire-and-rehire equation, the 2025 Act would remove the employer’s ultimate tool of coercion. Power would shift from a unilateral imposition by the employer to a requirement for genuine negotiation and agreement. If an employer wishes to change terms, they would have to persuade employees of the merits of their proposals, possibly by offering concessions, rather than threatening them with dismissal. This places the employee and their representatives on a much more equal footing during negotiations.
However, a critical perspective must consider the potential unintended consequences. Employers argue that fire-and-rehire, while controversial, can be a necessary tool for business survival in times of economic distress, allowing them to restructure and avoid widespread redundancies or even insolvency. By removing this option, the 2025 Act could force struggling businesses into making redundancies instead, which is arguably a worse outcome for the affected employees. In this scenario, power is not rebalanced towards the worker but rather shifts the risk from a reduction in terms to a complete loss of employment. The employer is prevented from choosing a middle path, potentially leading to more severe outcomes.
Despite this, the change still represents a genuine power shift in the context of contract variation. The law would no longer sanction a process where dismissal is used as a negotiating tactic. Instead, it would reinforce the principle that a contract of employment is a mutual agreement that cannot be unilaterally altered by the more powerful party. While employers could still pursue redundancies if there is a genuine reduced need for employees, they could not use the threat of dismissal simply to cheapen labour costs or impose flexibility. The focus would shift to the employer having to properly justify any proposed changes and seek consent, or risk litigation for constructive dismissal if they impose changes without agreement. Therefore, the proposed ban on fire-and-rehire is likely to be a more decisive and genuine rebalancing of workplace power than the more procedural reforms to ZHCs.
Conclusion
The proposed Employment Rights Act 2025 contains measures that will move the balance of power away from employers and towards workers in the contested areas of zero-hours contracts and fire-and-rehire. However, the extent to which this rebalancing can be considered ‘genuine’ varies significantly between the two issues.
For zero-hours contracts, the reforms provide a welcome and necessary pathway to greater security for some workers. The right to a contract reflecting regular hours is a tangible benefit that addresses the problem of one-sided flexibility. Nevertheless, the underlying dynamic, where the employer controls the aCllocation of hours, remains. The effectiveness of the new rights will be heavily dependent on their statutory definition and the ability of employers to adapt their practices to circumvent them. As such, the rebalancing is likely to be partial and contested.
In contrast, the proposed ban on fire-and-rehire represents a more fundamental and genuine power shift. By removing dismissal as a legitimate tool for imposing new contractual terms, the 2025 Act would force employers to engage in genuine negotiation and seek consent, upholding the principle of mutuality in the employment relationship. While this may have challenging consequences for businesses in distress, it directly tackles the coercive nature of the practice. For this reason, the reform to fire-and-rehire is more likely to achieve a genuine rebalancing of power than the more incremental changes to zero-hours contracts. Ultimately, the 2025 Act will be a significant piece of legislation, but its success in genuinely rebalancing power will depend not only on the words of the statute but also on the economic context and the capacity of the legal system to enforce these new rights effectively.
References
Department for Business and Trade. (2023) Statutory Code of Practice on Dismissal and Re-engagement. [Online] Available at: https://www.gov.uk/government/consultations/draft-code-of-practice-on-dismissal-and-re-engagement.
Labour Party. (2024) Labour’s plan to make work pay: Delivering a new deal for working people. [Online] Available at: https://labour.org.uk/wp-content/uploads/2024/05/Labour-Party-New-Deal-for-Working-People-24.05.24.pdf.
Small Business, Enterprise and Employment Act 2015, c. 26.
Employment Rights Act 1996, c. 18.
Taylor, M. (2017) Good Work: The Taylor Review of Modern Working Practices. Department for Business, Energy & Industrial Strategy. [Online] Available at: https://www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practices.
