Is it possible to change the terms of a contract by dismissing an employee then re-engaging him or her under different terms?

Yes, an employer can change the terms of employees' contracts by terminating the original contracts and re-engaging the employees immediately on the new terms. The employer will have a duty to consult collectively with the employees' representatives if it is proposing to dismiss 20 or more employees within a period of 90 days or less. The employer must give the employees the correct amount of contractual notice. If the employees accept the offer of re-engagement on the revised terms, the new contracts will start the day after the notice expires.

There is a risk that employees will bring claims for unfair dismissal. Where the employer has a genuine business need to make the change, it can rely on the dismissal being for "some other substantial reason" under s.98(1)(b) of the Employment Rights Act 1996, and argue that the dismissal was fair, as long as it followed a fair procedure.