This Section makes it automatically unfair for an employer to dismiss an employee if the dismissal was to replace the employee with a non-employee (such as a self-employed contractor or agency worker) to carry out substantially the same work, unless the dismissal was wholly or mainly attributable to the fact that the requirements of the business to carry out that work have reduced (or are expected to reduce), or the employer can meet an exemption for financial difficulties.
	Subsection (1) provides that a dismissal will be unfair where an employee is employed for the purpose of a business carried out by the employer and the reason for the dismissal is to enable the employer to replace the employee with an individual who is not an employee of the employer. This means that section 104J does not apply to employees employed by private individuals for non-business reasons.
	Subsection (2) sets out further detail as to when an employer will be considered to have replaced the employee with an individual who is not an employee of the employer for the purposes of subsection (1). It provides that:
the replacement individual must be carrying out activities for the purposes of the employer’s business in pursuance of a relevant contract (a contract, other than a contract of employment, to which the employer is a party (whether or not the individual is a party to it);
those activities must be the same, or substantially the same, activities as the employee (or the employee taken with other employees) carried out before being dismissed; and
the employee’s dismissal is not attributable to the fact that the requirements of the employer’s business for those activities to be carried out have ceased or diminished (or are expected to do so).
	Subsection (2) also clarifies that this can include cases where the replacement individual is the same person as the employee who has been dismissed.
	Subsection (3) provides that subsection (1) will not apply where the dismissal takes place before the employee has started work.
	Subsections (4) to (6) provide an exemption for this automatic unfair dismissal at which mirrors the exemption in section 104I, so that an employer will qualify for the exemption where the reason for the replacement with a non-employee is to eliminate, prevent, significantly reduce or significantly mitigate the effect of any financial difficulties that were affecting or likely in the immediate future to affect the employer’s ability to carry on the business as a going concern (or equivalent for public sector employer or local authorities) and the employer could not have reasonably avoided the need to make the replacement.
	If the employer meets the exemption, the Tribunal will still need to assess whether the dismissal was fair or unfair. Subsection (7) sets out a (non-exhaustive) list of factors for the Tribunal to consider when determining whether the dismissal was fair or unfair, including any consultation carried out with the employee, trade unions, or any other appropriate representatives. Subsection 104K(7)(d) allows the Secretary of State to make regulations specifying additional matters which must be taken into account under subsection (7).
	Subsection (8) provides relevant definitions for the section, mirroring those in subsection 104I(12).
	Subsection (9) provides that relevant intervention directions under subsection (5)(a) includes intervention directions that were given before the day the Employment Rights Act 2025 was passed.
Part 1: Employment Rights Dismissal New section 104K