Tesco loses ‘fire and rehire’ case at Supreme Court

Tesco has been blocked from its ability to dismiss staff at certain distribution centres and rehire them on lower pay, the Supreme Court has ruled. In a judgement passed today (12 September), five Supreme Court justices ruled on the motion unanimously.

In 2021, trade union Usdaw took legal action over the supermarket chain’s proposals to fire staff at Daventry and Lichfield distribution centres and rehire them on lower pay.

However, despite the High Court ruling in the union’s favour in 2022, Tesco successfully appealed against the decision that same year.

Following this, Usdaw then took the case to the Supreme Court, which led to today’s unanimous ruling that Tesco should be blocked from dismissing the staff.

The case first arose after Tesco planned to close some of its distribution centres in 2007 and offered staff retained pay to relocate. According to Usdaw, the chain wished to bring retained pay to an end in 2021 and told staff that the enhancement would be removed in return for a lump sum, or their contracts would be terminated and then reoffered on the same terms, but without the increased salary. 

Usdaw argued that the retained pay was described as “permanent” in the staff’s contracts, meaning it could not be removed.

A judgement backed by Lord Reed, Lord Leggatt and Lord Lloyd-Jones, Lord Burrows and Lady Simler said: “Objectively, it is inconceivable that the mutual intention of the parties was that Tesco would retain a unilateral right to terminate the contracts of employees in order to bring retained pay to an end whenever it suited Tesco’s business purposes to do so. This would have been viewed, objectively, as unrealistic and as flouting industrial common sense by both sides.”

Usdaw general secretary Paddy Lillis said: “Usdaw has been determined to stand by its members in receipt of this valuable benefit that constituted a key component of their pay. We recognised that they had been afforded this payment because of their willingness to serve the business and it was on that basis that we agreed with Tesco that it should be a permanent right.

“When we said permanent, we meant just that. We were therefore appalled when Tesco threatened these individuals with fire and rehire to remove this benefit. These sorts of tactics have no place in industrial relations, so we felt we had to act to protect those concerned.”

He added: “We were very disappointed with the outcome in the Court of Appeal but always felt we had to see this case through. We are therefore delighted to get this outcome, which is a win for the trade union movement as a whole.”

A Tesco spokesperson told Reuters that the case related to “a very small number of colleagues in our UK distribution network who receive a supplement to their pay”.

They said: “Our objective in this has always been to ensure fairness across all our distribution centre colleagues.”

Tesco has been contacted for further comment.